- How is a Business Control Framework related to a Tax Control Framework
- VAT Control Framework
- VAT Control Framework: Transitioning from Concept to Implementation
- 'Governance', 'operation' and 'infrastructure'
- A straightforward breakdown of Sarbanes-Oxley Act
- The Transforming Role of the CFO in Tax Management
- The Vital Role of CPA in Ensuring VAT Compliance and Assurance
- Investors' Expectations Regarding Taxes: Navigating Uncertainty and Strategic Planning
- Challenges of Using Spreadsheets for VAT Compliance
- VAT Under Management: An Overview
- Statistical sampling: quantification of tax risks
- Data analysis
- SAP review
'Governance', 'operation' and 'infrastructure' - Operational Challenges and Improvements
Page 2 of 4: Operational Challenges and Improvements
Operational Challenges and Improvements
In many organizations, we often observe a lack of clearly defined performance targets or monitoring systems, which leads to unresolved issues due to a lack of accountability. From a best practice standpoint, it is essential to establish performance targets and implement technology-enabled key performance indicators (KPIs) that facilitate ongoing monitoring—both formal and informal. These targets should also reflect the interactions between the tax department, business units, and other stakeholders.
Additionally, we frequently find that clear procedures for critical VAT processes are lacking, and consistent evaluation criteria for VAT planning are absent. As a result, essential VAT data needed for compliance, financial reporting, and other tax activities is not easily generated throughout the year. This critical information should be consistently available to provide objective evidence and support for business and tax-related decisions.
A systematic approach to tax planning is necessary, including established evaluation criteria for utilizing external advisors. For instance, when corporate entities seek advice from outside experts, a policy should stipulate that all written advice be provided in English and that the tax department be informed before consulting external advisors, particularly for material tax issues.
Effective tax risk management should continually inform operational decisions and strategic direction. To achieve this, a uniform tax risk process must be implemented to facilitate structured and consistent evaluations. Tax risk management must encompass potential events that could adversely affect the organization’s objectives, including missed opportunities for savings.
Resources and budget allocations should align with the results of tax risk assessments, prioritizing time and effort on high-risk areas. The indirect tax department should seek opportunities to optimize tax planning across various jurisdictions, business units, and tax categories.
In the case of non-routine significant business transactions—such as mergers and acquisitions—all indirect tax liabilities must be identified before the transaction's implementation. This process should consider all regulatory, legal, and record retention requirements, and include a thorough assessment of relevant indirect tax risks in consultation with the indirect tax department.
The indirect tax department's risk management strategy should differentiate between strategic, operational, and financial compliance risks, along with detailed action plans for managing these risks. Furthermore, the tax department must adopt a robust internal control framework that is fully integrated across all global tax functions, with reporting on internal controls included as part of its performance indicators.