Managing your tax function: getting it right in a global marketplace

There are endless articles in the press discussing the way high-profile companies are engaged in tax planning and tax management generally. This has undoubtedly put tax higher up the priority list of board members, but I think it’s fair to ask whether this will really be a change that sticks in the long-term and whether it will change the way companies manage tax.

My view is this. Let’s look at a risk management theory developed nearly ten years ago which is widely applied by companies in the UK and internationally. What you can reasonably conclude is that the ‘new’ approach organisations need to take to tax management is actually the same approach they are supposed to be taking to any other area of risk in the business.

In most cases the management of tax seems to be lagging behind when compared to the way companies manage other business risks and opportunities. Perhaps this is because the board has felt more comfortable dealing with non-tax issues in the past or simply didn't feel tax was that important, or at least could be left to a specialist to worry about.

I don't think there’s any one reason why tax is behind other areas of risk management but it is clear that PwC is now taking a different approach to engaging with the issue of tax management; aligning to accepted frameworks as referenced above. I also see the requirement for senior account officers (SAO) as a genuine attempt by the UK tax authorities to encourage the move to a best practice approach to risk management, even though it may be motivated by the resource saving they would experience if tax management improved.

The conclusion I draw is that companies will have to adapt their approach to tax management, and it will be for the reasons mentioned above, but moving away from risk theory I think this video sums up best why companies generally need to improve the way they manage tax and how their tax transparency fits into the wider picture in an increasingly global marketplace. Tax is one part of the broader footprint that your business has in the world, and getting your tax management right can have a positive impact on many other parts of the organisation.

Take a look at the video below to find out more.

I'm always interested to hear others views on this, it saves my wife being forced to talk to me about it.

Ray Farnan
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