Vertex 2024 Mid-Year Sales Tax Rates and Rules Report Reveals Local Governments are Increasingly Dependent on Sales Tax Revenues
25 Julio 2024 - 7:00AM
Vertex, Inc. (NASDAQ:VERX) (“Vertex” or the “Company”), a global
provider of tax technology solutions, today released its latest
findings from their Mid-Year Rates and Rules Report. The findings
reveal increases in both local and new tax rates as cities across
the country respond to economic pressures, highlighting an urgent
need for revenue at the municipal level.
The 2024 Mid-Year Sales Tax Rates and Rules report outlines the
evolving landscape of local tax implementation, proliferation of
fees, and increasing complexity of tax compliance for businesses
across the U.S. This is reflected by a 67% year-over-year increase
in city-level sales tax rate changes.
"The landscape of sales tax and indirect taxation continues to
change rapidly, both domestically and globally," said Michael
Bernard, Vertex Chief Tax Officer. "The ongoing trend of cities and
districts leveraging sales taxes and fees remains consistent,
following a decade-long trend. This coupled with the proliferation
of specialized fees and the global focus on digital VAT
initiatives, underscores the increasing intricacies of tax
compliance for businesses. It's crucial for organizations to stay
informed and agile, leveraging advanced tax technologies to manage
these multifaceted challenges confidently and effectively."
Key findings from the Vertex 2024 Mid-Year Sales Tax Rates and
Rules report include:
- City-level spikes: The first half of 2024
witnessed an unprecedented spike in city-level sales tax rate
adjustments. While city jurisdictions enacted 95 rate changes in
the first six months of 2023, the same period in 2024 saw a
dramatic increase to 159 authorized sales tax rate changes – a
striking 67% year-over-year increase. This significant acceleration
in local tax rate modifications reflects cities' proactive approach
to revenue management in response to evolving economic conditions
and budgetary pressures.
- Net-new taxation: The adoption of new taxing
cities (30) and district taxes (77) in the first half of 2024
remains high, as establishing new taxing cities and districts is a
simpler and faster process than altering state sales tax rates.
This decade-long trend of net-new taxation (taxing cities and
district taxes) is in stark contrast to state-level tax changes,
which typically require a lengthy legislative process.
- Looking local: Local governments raised sales
tax rates with three times more county-level increases than
decreases, and 12 times more city increases than decreases. The
move towards local-level taxation is driven by several key factors:
persistent inflation, the ongoing need to maintain and improve
public services, and the rising costs of issuing bonds due to
higher interest rates.
- New and unique fees: States are increasingly
implementing various fees, including airport, environmental,
special district and retail delivery fees. Two years ago, Vertex
solutions supported roughly 400 fee impositions; today, that number
is approximately 1,400.
Global Trends
On the global front, while most nations are refraining from
increasing VAT rates to avoid anti-competitive effects and
inflationary pressures, VAT remains a crucial funding source for
governments. Additionally, the EU is expected to see a rise in
environmental taxes, particularly carbon-related fees. These trends
underscore the evolving nature of indirect taxation globally, with
a focus on real and near-time reporting.
Implications for Indirect Tax Teams
Increasing complexity in business structures and the
proliferation of new fees demand a more agile and technologically
advanced approach to tax management. Moreover, the global shift
towards digital VAT initiatives and environmental taxes further
complicates international operations.
To effectively navigate these complexities, indirect tax teams
must:
- Update software systems;
- Streamline invoicing processes;
- Navigate a complex compliance landscape across multiple
jurisdictions.
This necessitates enhanced cross-functional collaboration,
especially with IT and finance departments. They must also
prioritize continuous education, advocate for advanced tax
management solutions, and remain proactive in monitoring and
adapting to regulatory developments worldwide.
For more information, download the full report here or visit our
2024 tax trends page.
About Vertex Vertex is a leading
global provider of indirect tax software and solutions. The
company's mission is to deliver the most trusted tax technology
enabling global businesses to transact, comply and grow with
confidence. Vertex provides solutions that can be tailored to
specific industries for major lines of indirect tax, including
sales and consumer use, value added and payroll. Headquartered in
North America, and with offices in South America and Europe, Vertex
employs over 1,400 professionals and serves companies across the
globe.
For more information, visit www.vertexinc.com or
follow us on Twitter and LinkedIn.
Media Contact:Rachel
LitcofskyVertex, Inc.mediainquiries@vertexinc.com
Investor Relations contact:Joe CrivelliVertex,
Inc.ir@vertexinc.com
Copyright © 2024 Vertex, Inc. All rights reserved. The
information contained herein is intended for information purposes
only, may change at any time in the future, and is not legal or tax
advice. The product direction and potential roadmap information is
not a guarantee, may not be incorporated into any contract, and is
not a commitment to deliver any material, code, or functionality.
This information should not be relied upon in making purchasing,
legal, or tax decisions. The development, release, and timing of
any features or functionality described for Vertex's products
remains at the sole discretion of Vertex, Inc. Any statements in
this release that are not historical facts are forward-looking
statements as defined in the U.S. Private Securities Litigation
Reform Act of 1995. All forward-looking statements are subject to
various risks and uncertainties described in Vertex's filings with
the U.S. Securities and Exchange Commission ("SEC") that could
cause actual results to differ materially from expectations. Vertex
cautions readers not to place undue reliance on these
forward-looking statements which Vertex has no obligation to
update.
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