Communication to Eliminate Tax Risk –

Tax Risk Management Web Interface System —V1.01

The Tax Risk Management Web Interface design should entail some of the following features:

– Interface customization according to each division in the business to be separately identifiable, with a consolidation option.

– Log on through a three-level log-on secure method:

– Username Read More

Communication to Eliminate Tax Risk

Tax Risk Management Web Interface System —V1.01

The purpose of this IT specification of a Tax Risk Management Web Interface System (phew! a mouthful of IT jargon, but simply put as the “Tax Risk Management Web Interface”) is to determine an organization’s tax risk and from that point forward to help manage that tax risk. The Tax Risk Management Web Interface is one of the key Tax Risk Management tools used.

The following aspects are important in the execution of Tax Risk Management Web Interface: Read More

Communication to Eliminate Tax Risk –

The Communication Questions

THE QUESTIONS PUT to the operations divisions in the business that will require regular review, as part of the Tax Risk Management strategy, will include the following:

• Do you know which perks or fringe benefits are subject to VAT?
• Have you accounted for VAT on any perks or fringe benefits?
• Have you exported any goods or services?
• Have you imported any software over the Internet and accounted for the VAT?
• Are your export documents 100% compliant with the tax regulations? Have you actually Read More

Communication to Eliminate Tax Risk –

Breakdown of Communication

PERSONNEL OFTEN MISUNDERSTAND instructions or make mistakes due to overwork, carelessness, or distraction. Temporary or new personnel may also not be adequately trained on new processes they have been introduced to. All of which contributes to the creation of additional unnecessary risks.

Breakdown can be avoided by careful and consistent communication, especially to new and temporary personnel.

Innermetrix © Read More

Communication to Eliminate Tax Risk

HUMAN JUDGMENT, ESPECIALLY when subjected to pressure, is imperfect. Unless checks and balances are introduced, and encouragement exists to communicate pressurized decisions that may have a negative tax implication, improper human judgment will lead to additional tax risk. For instance, it often happens in a merger acquisition scenario that parties to the transaction are placed under great pressure. Deadlines are created, and parties from all sides do their absolute best to ensure that the deadline is met, for fear of reprisals that may stem from causing the merger or acquisition to flounder. Read More

Communication to Eliminate Tax Risk –

Numbers Get You into Trouble

TAKE THE CASE of Equinox Ltd. (a fictitious name for the real company). It had garnered up thousands of VAT input tax credit invoices, with which it had claimed millions of dollars worth of input tax credits. The VAT legislation required Equinox Ltd. to ensure that the VAT number of suppliers was on all tax invoices. This also meant that the VAT number had to be correct.

After a while, the IRS conducted a VAT audit and reviewed a batch of tax invoices for a specified period. It became obvious quite quickly that all the tax invoices from one Read More

Communication to Eliminate Tax Risk –

Missed Communication –

THE LEADING CHARACTERS in this special report have been business owners, the BO/CFO, the tax manager, and the legal team. Much has been written about the formation of the tax team and the interaction with the outside advisors and other key participants. Hell, even communication with the CEO, the board, and the audit committee has been suggested.

Why then a chapter dedicated to communication to eliminate operations tax risk?

The fact is that historically in-house tax compliance departments have formed part of an Read More

Communication to Eliminate Tax Risk –

Introduction –

THIS IS THE last, but not least important, Tax Risk Management Step 7. The previous six chapters flowing from proactive tax risk management, with the tax team, compiling a Tax Risk Management strategy, getting to a point of embracing transparency and outside assistance, to obtaining more facts, and then ensuring internal audits verify the correctness of tax compliance, brings the TRM™ process finally to the common golden thread that binds all these chapters and their processes together—communication!

Lack of communication between the tax manager and the rest of the business, and only Read More

Communication to Eliminate Tax Risk –

The SEC in USA’s chief accountant said, “Sunlight is said to be one of the best disinfectants, and the area of income tax accounting could use more sunlight”.

Executive Summary

COMMUNICATION IS VITAL to the entire tax risk management process. Effective communication channels must be opened up and maintained on a regular basis, especially with the operations divisions of a business where there is often the least amount of transparent communication with the tax manager. Internal meetings between the various departments and the tax team must be encouraged on a more regular basis Read More

Internal Audits Fix Financial Accounting Problems –

Provisions and Tax –

WHEN BUSINESSES ACQUIRE database management and tracking systems such as SAP- or Oracle-based systems, closing balances from the previous systems used are transferred as opening balances to the new system.

After a number of years, and a change of guard at management level, the understanding and specific knowledge required to determine how those opening balances were made up. The old closing balance records are destroyed or get lost.  If a specific inquiry is directed at these opening balances, many businesses have problems in providing the Read More

Internal Audits Fix Financial Accounting Problems –

Compiling the Tax Pack –

THE TAX MANAGER will usually receive the basic components of the tax pack from the various financial managers in the various divisions of the business. The purpose behind this step is for each financial manager to review the financial accounting treatment of various accruals for accounting purposes and deductions for accounting purposes, so as to determine what accrual and deduction adjustments must be made for tax purposes in compiling the tax return for that year of assessment. Simple enough?

A tax manager of a major international consumer product multinational decided to review Read More

Internal Audits Fix Financial Accounting Problems –

Management Override of Controls –

MANAGEMENT MAY FROM time to time override controls put into place to ensure proper corporate governance. This usually happens with nonrecurring or nonstandard transactions or events. But this in turn leads to an override of established policies and procedures, usually with the intention of enhancing the business’s financial situation. Any such transgressions must be prohibited, unless with the approval of the board of directors, who should be made aware of the potential consequences.

This type of transgression in tax compliance takes place every month in most businesses Read More