Tax Risk Management and Board Responsibility - International Tax ...

Direction
The tax philosophy has to be determined by the board, documented, communicated and
implemented. It should be derived from and aligned with the overall management strategy.
One of the aspects that need to be taken into account is the general risk appetite of the
board which will be reflected in the tax risk attitude chosen. As the surveys have shown the
majority of board members would take a conservative view.
There is a spectrum of approaches towards tax that the board can adopt as the following
illustration outlines.
The board needs to decide whether the business should: be a leader by progressively
adding value through tax-driven business process and transaction design; take advantage
by devising and implementing progressive tax planning; or add value by exploring
opportunities including those above the profit line. Maintenance includes the enhancement
of commercial decisions already made and compliance requires fulfilling legal and
statutory obligations.
When determining the direction the board will also have to consider internal and
external business-specific factors. The internal factors mainly result from business goals
and strategy reflected in the core business processes which include the procurement
process, the provision of services or production and the sales process. As an example the
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