by: Karen Cayamanda
Thursday, October 21, 2010 | Outsourcing News |
UK and Irish insurance companies and those that provide intermediary/broking services are exempted from VAT, but under the new EU directive, they will soon face a 20 percent increase in costs on outsourcing business processes.
According to international VAT and IPT provider TMF, many companies have opted to outsource tasks such as claims handling and IT. “As a result, a supply industry has grown up which is divorced from the VAT-exempt insurance activity … has stretched the original scope of the exemption, and … has proved problematic to police.”
EU countries think that the popularity of the outsourcing industry poses a threat to jobs as it offers an option for companies to get things done offshore. TMF advised insurance companies to review their outsourcing strategy.
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