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LIFESCIENCELEADER.COM APRIL 2014 45 Case in Point: Managing VAT in Brazil Sponsors and CROs have an opportunity to mitigate VAT impact — but only through careful planning. Often, the VAT cost comes down to the contracting arrangement. In the panel, the experts used Brazil, which has fi ve different VAT taxes, as an example. User Customized Reporting Tools Configurable Workflows Enhanced, Intuitive Interface No Mid-Study Change Downtime datatrak.com +1.440.443.0082 marketing@datatrak.com Right Data to the Right Person, Faster D ATATRAK ONE ® gets the right data to the right person faster, with our transformational technology platform that optimizes clinical trials. Find out how D ATATRAK can improve your efficiency, from Concept to Cure ® . is an enduring best practice. If managing documentation presents significant chal- lenges, consider partnering with a service provider offering the people, processes, and technologies essential to navigating multi- country VAT rules and regulations and keeping a watchful eye on a global trial's bottom line. L VAT with a local model In this scenario, the CRO is based in the same country as the investigator. The investigator will be raising invoices for the clinical trial services to the CRO, which means there are two types of taxes: ISS tax (a Brazilian tax applied to the services provided to a third party by a company or professional and is paid by the service provider) of up to 5 percent, which is not recoverable PIS/COFINS turnover tax of up to 9.25 percent, which is complex to recover and in many cases is unrecoverable. Thus, by working with a CRO and investigator both based in Brazil, the sponsor may have a total of up to 14.25 percent additional costs. VAT with a regional model In this scenario, the CRO is based in Mexico, April Mulroney, CPA, CA, is VP of strategic account management and tax services at CFS Clinical (CFS). She is responsible for the Strategic Account Management Group at CFS Clinical where she ensures accounts which are engaged in the multiple service lines from the DrugDev portfolio are well-executed. but the investigator is based in Brazil. Like many countries, Brazil has special rules for cross-border services. The rules are very specifi c to each country, but in Brazil those services may be free from the relevant indirect taxes for services (ISS and PIS/COFINS), because they are supplied to or consumed by someone outside of that country. Therefore, with careful up-front consideration and review, no ISS or PIS/COFINS taxes may be applied (this, of course, depends on the specifi c facts for the clinical trial services). This comparison illustrates how a simple change in the structure of the arrangement can affect the VAT impact dramatically — by up to 14.25 percent in this example. If the investigative grant spend is $1 million, using the regional model could save $142,500. a nel, 0 4 1 4 _ C o n t r a c t _ S o u r c i n g . i n d d 2 0414_Contract_Sourcing.indd 2 3 / 2 1 / 2 0 1 4 1 1 : 1 4 : 0 1 A M 3/21/2014 11:14:01 AM