Ways to Alleviate Business Tax Risks
What Are Business Tax Risks?
In short, business tax risks arise when the amount of tax that a firm pays is not correct. Also, it can occur when tax positions are out of sync with the risk appetite of the committee of the firm. From the perspective of tax planning, people always think traditionally that risk management and compliance are only related to the financial issues. However, in this day and age, firms are under massive tension to make sure that tax risk management is one of the parts of their framework of corporate governance.
This is because there are more and more aggressive enforcement, new reporting and disclosure requirements, legal and regulatory adjustments, swift developments in technology, as well as a growth in information sharing between tax authorities. These have caused new risks to arise, and it has increased the requirement for companies to progress at the same speed as international tax developments (Also see How Can You Improve Your Business?).
Steps to Alleviate Business Tax Risks
Companies must improve their corporate governance and tax practices. They can accomplish this through examining its robustness when compared to the international best practice benchmarks, establishing a tax governance as well as internal control framework, and showing the operational effectiveness of the framework to all the stakeholders.
To execute all these, the board of a firm, especially those who are in the highest positions including the Chief Executive Officer, should carry out the steps below right away:
– Firstly, firms have to understand and analyze their existing tax risks in every region they manage. Such an evaluation can disclose the differences between the real position as well as the stated tax governance position. Firms should also involve themselves in tax dialogues all over the world. Besides voicing out their opinions, sharing their concerns with tax authorities is vital too.
– Besides, utilizing data and technology to alleviate your tax risks would be a good approach (Also see Ways Technology is Shaping the Future of Accounting). Since tax authorities are becoming more and more tech-savvy, doing so is crucial. Thus, firms have to shut that digital gap as well as acquire artificial intelligence, robotic process automation, blockchain, business intelligence innovation, data-lake development as well as other approaches. These are the tools you can use to help you out in tax analysis, tax filing, and providing you with insights for your whole firm.
– Firms should also take a worldwide judicious approach to manage tax risks. Nowadays, businesses should get themselves ready for everything. It can be answering to aggressive audits, conveying arrangements for pricing, handling reputational concerns which are related to taxes, or reviewing current business and cross-border structures. Thus, firms should have the capability of adapting and changing quickly.
– Another point is that firms have to ensure that they are updated to the tax laws that change rapidly. Since reputational risks and information sharing amongst tax authorities has increased, it is vital to ensure that your firm is maintaining a global perspective and keeping itself updated on the tax jurisdictions related to the field it is in.
If you have any queries about ways to manage the tax-related tasks of your company, engage an accounting service Singapore. This enables your firm to stay clear of any punishment by the tax authorities as a result of committing mistakes in tax filing or other issues related to taxes (Also see Reasons Why an Entrepreneur Should Hire an Accounting Firm).