Indirect tax accountant
What is indirect tax and what does an indirect tax accountant do?
Indirect taxes are any tax that can be passed on to another entity or individual - they are typically imposed on a manufacturer or supplier who then pass on the tax to the consumer. Indirect taxes are paid the moment a consumer buys a product and the tax is collected by the supplier and is paid to the government. Examples of indirect tax are VAT, excise duties (cigarette and alcohol tax) and import levies.
Indirect tax accountants advise how indirect taxes impact their clients’ financial and accounting systems. The remit is quite wide but includes identifying and addressing areas of risk, providing timely planning solutions and the application of technology-based compliance management solutions.
VAT is the main discipline for indirect tax accountants (see VAT accountant), but there are also roles in areas such as customs and excise duty, insurance premium tax and export control as well as international variants such as sales taxes and goods and services tax (GST).
At more junior levels, indirect tax accountants work in compliance, accounting and process positions.
Senior position responsibilities include providing strategic advice on indirect tax implications as well as managing compliance.
Some examples of indirect tax responsibilities include:
- Filing & preparation of indirect tax returns.
- Overseeing indirect tax entries in the P&L and balance sheets.
- Evaluating and improving processes and controls to optimise compliance efficiency.
- Corresponding with tax authorities (possibly from multiple jurisdictions) and monitoring the organisation’s indirect tax position.
- Communicating efficiently and accurately with external auditors and stakeholders about indirect tax issues.
- Contributing to VAT / insurance premium tax (IPT) projects while offering advice and ad-hoc research to the company.
Why are they important?
Many countries have increased their reliance on indirect taxes as a source of revenue and these taxes hugely affect businesses. In addition, legislation has become more complex making compliance more challenging.
Poor compliance can result in penalties, damaged reputation and missed opportunities.
Skills needed for this role
Indirect tax accountants must have excellent numeracy skills along with a logical and analytical mind. The ability to interpret and explain complex legislation is key with strong communication and interpersonal skills.
Strategic Professional Options examinations linked to this role
Career opportunities presented by this role
Indirect tax expertise is a much sought after commodity. Within accountancy firms, there is the opportunity to progress to partner for those who demonstrate exceptional business development, management and strategic skills as well as technical aptitude.
High level competencies required by indirect tax accountants include:
Stakeholder relationship management
A. Positively develops relationships with internal and external stakeholders.
B. Communicates and gains commitment from internal and external stakeholder.
C. Uses emerging technologies to collaborate and communicate effectively with stakeholders.
D. Applies professional and ethical judgement when engaging with stakeholders.
E. Aligns organisational strategic objectives with stakeholder needs and manages expectations.
A. Communicates knowledge of the operation and scope of the tax system, obligations of taxpayers, and the implications of non-compliance and advises on tax planning.
B. Advises ethically on strategic tax plans and computes the tax liabilities of individuals.
C. Advises ethically on strategic tax plans and computes the corporation tax liabilities of individual companies and groups of companies.
D. Explains and computes the effects of value added tax (VAT) / goods and services tax (GST) and indirect tax on incorporated and unincorporated businesses and advises appropriately.
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