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The significance of indirect tax has escalated recently. While the rates for direct taxes, such as corporate income tax, are decreasing, indirect tax rates continue to rise. For multinational companies, this can mean managing indirect tax amounts exceeding 5 billion euros annually.
Surveys conducted by major consulting firms highlight that existing control mechanisms are frequently inadequate. Errors in accounting can lead to substantial tax assessments and considerable penalties. Given the scale of these amounts, such mistakes can also severely damage the reputation of a publicly traded company. Despite the magnitude of these risks, key performance indicators (KPIs) to monitor them have not been effectively developed, leaving financial executives unaware of the potential threats.
The Indirect Tax Function recognizes that it is often understaffed and operating with a budget that is insufficient for optimal performance. However, there is often a lack of clarity on how to advocate for these issues and elevate them on the CFO's agenda.
It is crucial for change to originate within the organization itself. Advisers can emphasize the need for action, but without the commitment of those who are directly involved in the processes, progress is unlikely. Therefore, it's imperative to break this cycle of inaction. What steps can be taken to facilitate this change?