The last few years tax authorities, corporate management, but also investors and customers, are increasingly demanding more tax transparency and tax risk management. Now more than ever, companies need to be able to demonstrate that they are continuously ‘in control’ of tax risks.
At the same time, we often see that tax departments have limited central oversight of all the tax operations. Many discrete local processes can make it difficult to manage tax processes, especially where there is a lot of local discretion in respect of tax function performance or when the tax processes are (partly) performed in other departments, for example finance. This is even more difficult if companies operate in many different jurisdictions or perform increasingly complex activities.
To bridge this gap, many companies are reimagining their tax processes by introducing tax controls that are consistently applied across the organization. Adding tax controls supports the tax function by managing and dealing with tax risks in a structured and standardized manner. This not only delivers the required stakeholder transparency, but by addressing risks when they occur, the continuous improvement of tax processes is assured.
What are the key challenges facing organizations?
Improving your tax risk management framework with appropriate processes and tax controls can be challenging. Some of the key challenges facing organisations include:
- Not knowing where to start. Without sufficient insight into current end-to-end processes it can be difficult to identify the key risks or areas where the process can be improved.
- Not knowing how to effectively mitigate risks. Tax processes can be closely connected with processes in other departments. Designing controls thus requires a multidisciplinary approach, combining expertise from tax, business and IT. Not having sufficient knowledge in all these areas makes it difficult to move from spotting tax issues for which temporary solutions are found, to identifying root causes and implementing effective controls.
- Limited access to information. In many organizations the vast amount of tax data collected is not directly accessible by tax professionals or needs to be modified. This can make the implementation and monitoring of controls inefficient and time-consuming, especially when these controls are data-driven.
- Lack of a business case. We often see that tax departments have to manage the increasing tax transparency and risk management burden, although the number of tax resources available for this remains unchanged. Without a business case, it can be difficult to initiate changes and allocate a budget for improvements.
How can we help?
Current State Assessment and Insights
Supported by data analytics, companies now have the opportunity to transform tax data into actionable insights. KPMG’s Tax Intelligence Solution (TIS) enables us to help identify the most important risks and opportunities for your organization. By accessing relevant tax data in a user-friendly way we can produce an accurate oversight of your tax processes without the need for time-consuming interviews. This allows you to focus on results - whether that is identifying key risks or making a business case for process improvements. We offer a suite of Tax Data Analytics for corporate, customs, transfer pricing and indirect taxes.
Tax Control Implementation
With the right set of controls, tax risks can be minimized without creating an operational burden. KPMG can help with selecting, implementing and testing these controls in an overall operational tax control framework. With our team of experienced transformation specialists and catalogue of industry-standard controls, we can help you to increase your tax control maturity level, ensuring that your organization is constantly ahead of the game.
Using modern technologies such as RPA and data analytics the execution of most controls can be automated.
Continuous Control Monitoring
Setting up continuous control monitoring allows for even more stakeholder transparency and better tax risk management. With real-time dashboards tax users can monitor the status of manual and data-driven controls at various aggregation levels and drive continuous improvement. KPMG can support your organization with embedding tax controls in either your existing (GRC) solutions or in our KPMG cloud solution.
If you would like to know more about Tax Process & Control or if you have questions of a more general nature, please contact our specialists. They will be pleased to provide you with further information or advice.