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As the world grows increasingly interconnected, businesses face more complex growth strategies. The operational structure of a typical multinational corporation today resembles a Rube Goldberg machine, a convoluted assembly of interconnected functions that must align for tax compliance, regulatory adherence, and accurate reporting.
Unlike the more streamlined approach for managing income-based taxes, the responsibilities and primary drivers for indirect taxes are often distributed widely across the organization. These can reside not only in the tax department but also in diverse areas such as finance, information technology, supply chain management, logistics, human resources, and beyond.
Additionally, there is a rising trend toward the establishment of shared service centers (SSCs) that handle operational processes like accounts payable and receivable, as well as various outsourced functions pertaining to tax, finance, and treasury. Tax determination and reporting across the enterprise may be governed by one or more enterprise resource planning (ERP) systems, which can vary in their levels of integration and sophistication.
These dynamics contribute to a rapidly evolving and increasingly intricate business environment, necessitating a new approach to indirect tax advisory services.
From the perspective of a Tax Control Framework, implementing risk-based controls is crucial, particularly when navigating unusual transactions, which can elevate tax risks. One significant example of such unconventional transactions is the migration to new jurisdictions.