Tax Control Frameworks: Accountability and good governance are in focus
Tax Control Frameworks are becoming more and more important as authorities around the world have increased their focus on accountability and good governance. The purposes of a tax control framework are many. First and foremost, a tax framework is a tool for enabling timely identification and mitigation of tax risks, and it can help companies get control over their tax position. Further, a tax control framework is a tool for ensuring and documenting to public authorities and stakeholders that a company complies with tax legislation in all jurisdictions.
Tightened regulatory requirements on transparency and a more restrictive administration of the law by tax authorities present major challenges for the management of taxes and make a fully integrated tax control framework indispensable. Failure to conduct business in accordance with legislations has the potential of both leading to financial losses and penalties as well as misrepresentation that may damage a reputation severely.
This is why many companies are currently in the process of documenting their tax control framework. Documenting a tax control framework means among others well-documented and well-functioning controls. There are many manual processes that can make living up to the requirements a long and tedious process. Some struggle with Excel-based control checklists that complicate the process and make it troublesome. Others struggle with differences in control performance because of different employees’ perception of checklists, standards and requirements.
In many tax departments, the concept of internal control is a relatively new one. Historically, focus has been on risk mitigation – either proactively via preparation of defense files and the like, or reactively via tax cases. Internal controls have only rarely been systematically set up, scheduled, delegated, monitored and reported upon in order to support risk mitigation.
Strong Tax Control Framework
Impero and KPMG Acor Tax have entered a collaboration to strengthen the delivery of solid tax control frameworks. The collaboration combines KPMG Acor Tax’s unique insights on the elements of an efficient and sustainable tax control framework with Impero’s powerful solution to design, schedule and easily apply the controls to employees across the company. This has resulted in tax control framework software. Read more about the collaboration here.