Werner Lapage, Partner BDO Tax
We all like surprises! Except from the tax authorities. Every organisation has to pay taxes, but no company wants an unexpected tax bill in its letterbox. Moreover, tax errors and alleged unethical conduct keep everyone wary of taxes. Yet, despite the potential negative consequences, companies are often unaware that they are not complying with their tax obligations. The cause is double: organisations can no longer see the forest for the trees and they lose track of their tax obligations; or, they think that a detailed ‘Tax Control Framework’ is primarily a matter for large multinationals. Wrong twice!
Tax risk management, and ensuring control of your tax position, are increasingly evolving from ‘nice to have’ to ‘must have’ within a company’s or organisation’s risk management. Achieving a culture without tax surprises is good for any business – regardless of size, industry or tax risk profile.
According to Olivier Michiels, Partner BDO Tax, tax assurance and risk management go much further than simply managing tax risks. And this is anything but a matter that only concerns the tax or finance department (of multinationals). “It is a mindset, a culture within the organisation, that starts by formulating a tax strategy in line with the broader corporate mission, vision and strategy. And this is implemented in policies, processes and technological solutions that ensure compliance and make it possible to identify, manage and report tax risks in good time. This applies to all types of taxes and at all levels of the organisation. A company that attaches importance to good governance should also pay attention to tax assurance and risk management.”
Due to the increasingly complex tax systems, increased tax reporting obligations, and closer national and international cooperation between tax authorities, the need for a substantiated tax assurance and risk management policy is growing. “But don’t just regard that as a burden,” stresses Olivier Michiels. “There are also benefits. But of course you have to redeem them. Due to the complexity, companies are missing out on tax benefits or opportunities more than ever. A company’s clear and transparent tax strategy – and communication about it – also contributes to the realisation of the company’s ESG (Environment, Social and Governance) policy and sustainability objectives.”