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

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already joined. The main goal is to discuss compliance challenges. For the first time China, India and South Korea are included in such discussions 48 . From an investor’s perspective there is a demand for increases in the value of the company through sustainable tax rate reductions, and for ‘no surprises’. Long-term aftertax performance indicators give a clear indication of the effectiveness of tax risk management. Consequently, after-tax goals are greatly to be preferred as performance measures for management. The change in the role of tax from an internal domain of the tax department to the external domain of stakeholders will continue and the challenges for the board will increase. The changing environment will require tax risk management to move towards a tax governance system. Tax governance will have to cover the tax philosophy, tax strategy, internal policies and processes with regard to tax risks, and external communication on all tax issues. The board will be held accountable for setting a direction, implementing a tax governance system and of course for value enhancement through tax reduction. 48 Internal Revenue Services, Department of the Treasury , USA http://www.irs.gov/newsroom/article Page 24 / 25
VII. Conclusion The board is responsible for tax risk management and will be held accountable for it by the stakeholders of the company. Challenges in the global capital markets result in increasing expectations from stakeholders and in tightening regulation on corporate governance with a strong focus on internal controls. Furthermore, companies are more and more relying on their reputation of behaving in a socially responsible way as a factor contributing to their success. These developments will cause a shift from the board being in charge of tax risk management to a responsibility for tax governance as more widely conceived. Increasing requirements and challenges will cause ongoing changes for business with regard to tax risk management and governance. The vision of an effective tax governance system is to continually minimize the effective tax rate and add sustainable value to the company. From a long-term perspective this is the best strategy for all stakeholders since only a company that remains competitive and successful in the market can pay taxes and contribute to society. Page 25 / 25
Page 1 and 2: Tax Risk Management and Board Respo
Page 3 and 4: I. Introduction Is the board respon
Page 5 and 6: II. The changing Landscape - Why ha
Page 7 and 8: usiness transactions such as merger
Page 9 and 10: III. Tax is in the boardroom - What
Page 11 and 12: extraordinary pressure from investo
Page 13 and 14: made on how aggressive tax manageme
Page 15 and 16: department needs to be in line with
Page 17 and 18: Processes to raise awareness of tax
Page 19 and 20: Direction The tax philosophy has to
Page 21 and 22: Control It is the responsibility of
Page 23: VI. Future developments Stakeholder

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

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