In this increasingly transparent business environment, it’s becoming clear that businesses should critically pay attention to tax risk just like they are paying attention to other risks. Tax risk can have an impact well beyond financial penalties, and new operating models can mean new and unforeseen risks. Therefore, it important for you to identify, assess, and manage tax related risk, and at the same time develop controls and governance strategies to deal with tax risk. Often, organizations are asked to articulate their tax risk management framework to third parties such as regulators, revenue authorities, internal audit, executive management, business and functions, and board.
The purpose of tax risk management as part of an organization’s overall business strategy is to avoid unnecessary tax costs, whilst ensuring sound compliance with legislative requirements.
Manage your Tax Risk with Clarity and Transparency
In Cynet, we believe that the foundations for all components of tax risk control framework is the organization’s culture, and it is the platform on which it is built. Executives together with the board should take the lead in establishing a strong risk management culture. We train our clients on every guideline related to tax risk to make sure they understand what they are expected to do.
To leverage technology, the management of any organization needs to periodically consider the suitability of the IT infrastructure and its configuration for tax. We help assess the potential IT related risks to tax processes and determine the dependency between the use of technology in tax processes and technology generated controls. Hence, it is prudent for businesses to be aware of tax specific software that can reduce risk and free up resources for other aspects of compliance.
Critical Aspects of Managing Tax Risk
- Transparency exercised by organizations while articulation of tax risk strategy, translates the strategy into daily activities ensuring opportunities leveraged as well as risks managed.
- Embrace efficient, practical tracking of individual, and aggregate tax risk associated with business activities and tax decisions. This provides better understanding and more insight into tax options.
- Strive to identify gaps between the current state and desired state of processes to enable a smooth consolidation and communication of tax risks, tracking, validating, and improving tax management processes.
- Provide a scalable, risk-based framework to accelerate progress toward the long-term vision of effective, sustainable management of tax operations.
- Firmly positions the management of tax risk within the context of the wider organization’s governance and risk management program.
- Improved image, increased tax authority confidence, less enquiries and audits, lower costs and resource requirements.
