- The Role of the Head of Tax: Mastering Compliance, Strategy, and Value Creation
- Embracing Corporate Fiscal Responsibility: A Pledge to Sustainable Business Practices
- A VAT/GST strategic plan: approach and scope
- Company's 'governance', 'operation' and 'infrastructure'
- Strategies, approaches and models
- Structure the tax function
- Gain awareness and acceptance of senior management
- Setting the objectives of the tax function
- Audit defense strategy
Company's 'governance', 'operation' and 'infrastructure' - Governance: Challenges and Improvement Opportunities
Page 2 of 4: Governance: Challenges and Improvement Opportunities
Governance: Challenges and Improvement Opportunities
The tax function may encounter significant challenges in the absence of a formally documented strategy, set of objectives, or planning to guide its operations. Furthermore, when senior management lacks written and agreed-upon objectives and risk tolerance levels for tax planning and strategy formulation, it can lead to inefficiencies.
Without a robust tax policy, progress often relies on individual influence within the organization, resulting in a fragmented approach where not all stakeholders are aligned. This fragmentation can hinder the establishment of standardized and global controls.
Improvement can be achieved when the tax department’s strategy, objectives, and risk tolerance are clearly understood throughout the organization and formally approved by senior management. Moreover, the objectives and strategies of the indirect tax department should align with the company’s broader business goals and overall tax strategy.
Building direct relationships with key stakeholders, including the CFO, audit committee, internal audit, and tax authorities, is crucial. Efforts should be made to create and maintain productive and proactive relationships to enhance tax stakeholder engagement.
Developing a tax risk policy that defines risk tolerance levels for tax planning is essential for effective tax risk management and resource allocation. Additionally, the organizational structure should meet the needs of the tax department, ensuring alignment between the indirect tax department and other key functions—such as corporate finance, procurement, legal, IT, and business operations.
Clearly documenting the division of roles, functions, and responsibilities between the tax department and the business is vital. Manuals, procedures, and working instructions should be readily accessible online for all stakeholders. This accessibility enables tax professionals to engage proactively with multidisciplinary teams in various projects while demonstrating the tax department’s value to the business.
The tax department must stay current with developments within the organization to fulfill its advisory role effectively. A robust learning and development environment will equip tax staff with the latest insights and knowledge.
External representation and lobbying efforts should also be considered to influence policies across local, national, and European levels. Building and maintaining relationships with government and industry stakeholders will enhance indirect tax planning and contribute to the broader objectives of the organization.
It could also be that the financial data in the system does not reflect the business model design or that change is not properly managed. Besides that, in the current 'as is' it is often a challenge to get access to the relevant tax data that must be reported to regulators, investors and tax authorities in every business unit and country in which a company operates.