VALUE ADDED TAXVAT - 101

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Raj Shah, PresidentSam Shah, Chief Operating Officer

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Key Objectives...

What is VAT

Which Countries refund VAT, on What type of expenses

How can you get your VAT $ back

Anything Else...from your side?

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US SALES TAXAssessed only on goods, not on services generally.

Only paid by the end user(business or private person)

Is a cost to the business when it has to be paid

U.s. is almost the only country which has Sales Tax instead of VAT.

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Value-Added Tax (VAT)Consumption tax is added to most goods and services in all the levels of the supply chain

Is almost never a cost to the business

Is a cost to the private person

There is no exemption (unlike in US for State Entities) - Everyone has to pay VAT

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VAT Simple Example”A Sample 10% VAT, Foreign Country

Retailer CustomerBakerFarmer

GrainLoaf Loaf

20c+2c 60c+6c $1+10c

GovernmentCollects 2 6 10 =18

Net 2 4 4 =10Refunds (2) (6)=(8)(0)

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In USA - Sales TaxA Sample 10% Sales Tax

Retailer CustomerBakerFarmer

GrainLoaf Loaf

20c 60c $1+10c

GovernmentCollects 10

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What happens in certain foreign transaction:Buyer in One country & Seller in Another

Buyer

Seller

US Entity will have to pay VAT, but can reclaim full or part of VAT from certain foreign tax authority - VAT Refund

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Entities Pay Significant VAT $s

UNAWARENESS

But fail to recover due to

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Japan Austrl. S. Kor. Spain Germany France UK Italy Sweden Denmark

25%25%

21%20%19.6%19%

18%

10%10%

5%

VAT % Rates for Select Countries that Refund

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VAT % Rates for all Countries that Refund to USA Entities:

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VAT Can Be Refunded on the following

Travel Expenses

Hotels/Housing

Car Rentals

Transportation

Meals

Banquet, etc

Meeting Expenses

Seminar

Conferences

Training

Trade Shows

Theater Tickets

Professional Fees

Legal

Acctg./Tax

Marktg/Adv.

Many Others:

Research Related Exp.

Study Abroad

Oxford Program(Building)

Program Dir.Expenses

Site Visits

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Sample: Hotel Invoice

$320 refund on a single invoice

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Sample: Exhibition Invoice

$18,000 refund on a single invoice

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Research InvoiceExample

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$5,300 refund on a single invoice

Sample AP Report...to identify FX payments

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Vendor'Number Invoice'Number Invoice'Date

Invoice'Total'Amount

Invoice'Currency

VAT'8'Amount'Approved

Sales'Tax'8'Amount'Approved Final'Approver

Alloc.'#1'Amount

Alloc.'#1'GL'Account'Number

Alloc.'#1'Cost'Center

Alloc.'#1'Internal'Order'Number

Alloc.'#1'Network'Number

Alloc.'#1'Network'Activity'Number

Alloc.'#1'Cost'Center'

Assignment

Alloc.'#2'Amount

651645 1078453 4/30/2012 8078.4 GBP 1346.4 Gerard,'Mark 8078.4 70511000 8907 GA9651645 1078452 4/30/2012 3672 GBP 612 Gerard,'Mark 3672 70511000 8907 AH2613300 KCLR4302012 4/30/2012 11720.65 USD Manor,'Tom 11720.65 70511000 GA8651645 1078412 4/30/2012 2160 GBP 432 Gerard,'Mark 2160 70511000 8920 FQ1651645 1078492 4/30/2012 9363.6 GBP 1560.6 Gerard,'Mark 9363.6 70511000 GA9 GA9651645 1078494 4/30/2012 18856 GBP 3771.2 Gerard,'Mark 18856 70511000 8920 FQ1651645 1078506 4/30/2012 4642.38 GBP 773.73 Gerard,'Mark 4642.38 70511000 8907 AH2651645 1078542 4/30/2012 6166.8 GBP 1027.8 Gerard,'Mark 6166.8 70511000 8907 AH2651645 1078545 5/4/2012 597.78 GBP 99.63 Gerard,'Mark 597.78 70511000 GA9651645 1078546 4/30/2012 8395.92 GBP 1399.32 Gerard,'Mark 8395.92 70511000 8907 AH2651645 1078543 5/4/2012 432 GBP 72 Gerard,'Mark 432 70511000 8907 GA9651645 1078541 5/4/2012 4233.6 GBP 705.6 Gerard,'Mark 4233.6 70511000 8907 AH2656349 186305 4/30/2012 10470.98 USD Daly,'Liz 10470.98 70511000 FQ7633597 21100 4/30/2012 3640 USD Manor,'Tom 3640 70511000 R09654158 53003372 5/7/2012 22318.96 EUR Manor,'Tom 22318.96 70511000 100081624/0008100081624 8

Sample Wire Transfer Report...to identify FX Expenses

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3 Key Documents Required to Recover VAT on your Corporate Expenses

1. Original Invoice

From foreign supplier

Indicating VAT Rate, VAT Amountand VAT #

Full Description ofproduct or servicesprovided

Fax not acceptable,Org. invoice returned with the Refund

2. Proof of Payment*

Check Copy

WIre Transfer Confirmation, etc

3. Certificate of US Tax Residency

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Reclaim Filing Six Months after the fiscal Year-EndUK: Fiscal Year July-JuneDeadline - by Dec 31

EU & Other Countries:Fiscal Year Jan-DecDeadline - by Jun 30

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No Extensions to fileMissed deadline = Lost refund

In Summary VAT

Is a Value Added Tax on Goods/Services levied in many countries, primarily European countries .

Can be as high as 25%.

Is fully or partially refundable to foreign entities.

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VAT REFUND OPPORTUNITIES

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Some of our University Clients

Emory Indiana

Northwestern Uni of Chicago

Stanford UCLA

Duke BYU

Auburn Ga Tech

Uni of Delaware State Uni of NY

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VAT Recovery for some of University Clients:

A"COMMENT"FROM"A"TYPICAL"SATISFIED"CLIENT:"Upon"receiving"a"significantly"large"refund"on"4/4/2009,"Katherine"Bellows,"International"Director"for"Georgetown"University"sent"a"note"saying:"This"is"great"news!"Thank"you"so"much"for"all"of"your"hard"work!!""

University Client 2009 2010 2011 Total US$

Georgetown University 75,139 51,360 24,250 150,749

Duke University 91,471 8,577 100,048

Northwestern University 18,634 9,454 21,045 49,133

Emory University 6,371 16,095 20,238 42,704

University of Illinois 3,443 9,002 23,544 35,988

University at Albany, SUNY 23,120 23,120

University of Wisconsin, System 4,675 8,712 8,849 22,236

University of North Carolina 15,858 1,749 3,543 21,150

Brigham Young University 4,749 5,531 10,531 20,812

Utah University 1,142 8,343 8,556 18,041

Georgia Institute of Technology 4,339 6,376 6,641 17,355

Auburn University 1,066 2,552 11,991 15,608

Louisiana State University 6,852 5,724 12,577

Carleton College 4,903 4,940 9,843

University of Washington 3,768 5,963 9,731

University of Chicago 5,249 2,508 360 8,116

Case Examples:

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25

0"

500"

1000"

1500"

2000"

2500"

2005&06" 2006&07" 2007&08" 2008&09" 2009&10" 2010&11"

Mul.ple/Unknown"

Middle"East"

La.n"Amer/Carib/N"Amer"

Europe"

Australia/New"Zealand"

Asia"

Africa"

UGA Study Abroad Participation # of Students

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University of Georgia - Some Study Abroad Programs eligible for VAT: Austria/Germany.Terry.Travels.2Business.in.Europe. UK. Aberystwyth.University.Exchange,.United.

Kingdom.(Wales).

Croatia. Croatia.Maymester.Abroad. UK. Art.and.Gardens.of.Italy,.France,.England,.Scotland,.and.Ireland.

France. Cannes.Film.Festival.Study.Abroad,.France. UK. College.of.Education.Study.Abroad.in.Scotland.

France. Cannes.Lions.Advertising.Festival.Study.Abroad,.France. UK. Georgia/Ohio.State.Law.at.Oxford.2.Spring.

Semester.

France. French.and.European.Agricultural.and.Environmental.Sciences.Study.Abroad. UK. London.Study.Abroad.Program2FACS.

France. Millennial.Landscapes.of.Southwestern.France. UK. Social.Issues.in.Northern.Ireland.

France. UGA.a.Paris,.France. UK. Study.Abroad.in.Britain.and.Ireland.

Germany. Field.Experience.in.Health.Promotion,.Germany. UK. Theatre.and.Film.Studies.in.London.

Germany. Freiburg.Study.Abroad. UK. UGA.at.Oxford.2.Franklin.(Summer,.Spring.or.Fall.term).

Germany. SSG.Internship.Program,.Germany. UK. UGA.at.Oxford.2.Grady.(Summer).

Japan. Daito.Bunka.Exchange,.Japan. UK. UGA.at.Oxford.2.SPIA.(Spring).

Japan. TXMI.Tokyo:.Study.Tour.in.Textiles,.Merchandising,.and.Interiors. UK. UGA.at.Oxford.2.Terry.(Summer).

Japan/Korea. Globis/Asian.Study.Abroad.Program. UK. UGA.at.Oxford.Junemester.(Summer).

Netherlands. UGA.Terry.College.2.Maastricht.Univ.School.of.Business.&.Economics.Exchange. UK. UGA.en.France.

Switzerland. Georgia.Law.Summer.Program.in.Brussels.&.Geneva. UK/Switzerland. Studies.Abroad.Europe.

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$83,251.04++$81,152.92++

$4,418.38++ $3,931.93++

Submi2ed+ Refund+

200582008+

200982012+

95% Drop in UGA’s VAT Recovery in the last 4 Years

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In Summary.....

Lets not leave any Money on the table...

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