Adhering to legal requirements and obligations and systematically and preventively safeguarding the company’s internal policies in the field of taxes is referred to as tax compliance. The tax compliance management system (tax CMS) for organisational implementation of management decisions based on principles, procedures and actions is used to ensure the effectiveness and business transactions of a company.
New standards have been set in tax reporting due to internationalisation of accounting, tax legislation and complexity. Companies are increasingly exposed to the challenge to meet the ever-increasing requirements for the implementation of an effective tax CMS for monitoring tax scenarios in the enterprise.
The scenarios relevant for monitoring mainly include the following:
- Identification, the object and evaluation of tax risks for all types of taxes based on the company’s tax objectives
- An appropriate organisational structure and appropriate governance processes that reflect the size of the company and the enterprise- or industry-specific tax requirements
- Adequate documentation and communication of tasks, responsibilities and authorisations on the one hand, and tax processes on the other hand (record-keeping obligation)
- Tangible and timely identification and implementation of legal and/or
- Regulatory changes in tax law or tax accounting
- Identification, the object and evaluation of tax risks for all types of taxes
- Timely and correct tax reporting and tax forecasting
- Accurate calculation, evaluation, classification and disclosure of tax liabilities and tax assets
- Timely payment of tax liabilities, including retention amounts and paying of withholding taxes
- Lodging extrajudicial and judicial remedies
- Accurate and complete calculation of tax provisions
- Efficient and effective fulfilment of obligations to cooperate
Risks of a non-functioning tax compliance system
An effective tax CMS ensures the mitigation of the risks listed above and should be in every company’s focus. One essential core element of the effective tax CMS is an enterprise-wide risk management and control system that reflects the systemic principles of the process and legal requirements in an appropriate way.
Our service – not one size fits all
We support you in determining your situation and in optimising or implementing an effective tax CMS.
Orienting our actions on the basic elements of a CMS as per IDW PS 980, we identify and analyse your fiscal objectives and risks in collaboration with you, implement a holistic procedural approach in the tax area and collaborate with you to develop standards for organisational structures in the tax process. This includes, for example, developing organisational and technical instruments, such as manuals, guidelines, checklists and IT-supported tools, as well as methods for early risk detection, analysis and risk reporting.
If you already have elements of a tax compliance system in place, we can identify existing gaps by way of a preliminary examination and submit proposals for completing the system. The aim of a broader examination is to obtain information on whether your tax compliance system adequately covers existing principles and actions (concept audit) and is capable, with a reasonable degree of assurance, of identifying and preventing the risk of major infractions in good time (appropriateness test) and, beyond this, whether the stakeholders take these into account within the scope of their responsibility (effectiveness test).
Effective support from BDO
Our interdisciplinary team of experts, who have acquired and bundled their expertise in many years of practice, helps you design your individual tax CMS. We are thus in a position to offer you best-practice-oriented, yet tailored solutions that meet your needs and are developed and agreed in collaboration with you.