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

More documents

Recommendations

Info

have on corporate structures, processes and transactions? Tax issues are complex, multifaceted and subject to ongoing change. What qualifications do the board need to actually understand and govern tax risks? What exactly does the board need to do to implement a tax risk management system? What communication and documentation requirements need to be fulfilled? What kind of future developments need to be considered? This paper will address most of the issues raised, mainly from a practitioner’s point of view. The study starts with a short look at the developments that have given rise to the increasing importance of tax risk management for the board. Following this analysis the key results of a recent KPMG survey of the views of board members on tax risk management are outlined. The third part will show the challenges of tax risk management and introduce practical solutions. In chapter four the paper focuses on the responsibilities of the board for managing tax risks. Where do we go from here? The final chapter considers what the future might look like with regard to tax risk management and the board’s role in this area. Page 4 / 25
II. The changing Landscape – Why has tax risk management become increasingly important? 1 Tax is in the news “Non-compliance a growing problem” 1 , “Tax: Multinationals’ low bill in poor nations under fire” 2 , “Managers under pressure to give tax its due – as rules and scandals proliferate, the issue of how to manage tax has become far more urgent” 3 , “Cut tax or lose business” 4 , “HSBC says tax regime may force it to move” 5 , “IFRS brings tax out of the back room – TAXING MATTERS – a company’s tax policy, traditionally a mere technical issue, is increasingly viewed as a strategic matter” 6 . Major business headlines deal with non-compliance of companies, tax as a significant cost factor for business and increasing regulation on the disclosure of tax information. Primary goal for the board is to achieve excellent financial results. Tax is a significant cost factor for companies. That implies that minimizing tax will increase profitability. But besides the obvious tax payments there are other costs that are harder to measure but that need to be taken into account. There is a strong interrelation between the success of a business and its reputation which significantly depends on the general perception of the company. The public interest in corporate social responsibility of businesses (CSR) is growing. Paying the taxes legally required in any country where the company operates is considered an important part of being socially responsible. CSR is no longer the concern only of non-government organisations. It has been raised to the agenda of international organisations like the United 1 Financial Times, October 13, 2006 2 The Guardian, September 18, 2006 3 Financial Times, August 19, 2005 4 The Times, October 10, 2006 5 Financial Times, October 6, 2006 6 Financial Times, July 4, 2005 Page 5 / 25
Page 1 and 2: Tax Risk Management and Board Respo
Page 3: I. Introduction Is the board respon
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 and 24: VI. Future developments Stakeholder
Page 25: VII. Conclusion The board is respon

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

Create successful ePaper yourself

Delete template?

Save as template?