The importance of effective tax governance

The tax settlement between the Australian Taxation Office (ATO) and a global mining company reminds multinationals of the importance of strong tax governance. These incidents highlight the need for multinationals to have strong tax governance structures.

Without such structures, companies risk incurring significant financial penalties and damage to their reputation. Multinationals must therefore ensure that they have adequate systems and processes in place to manage their tax affairs in a compliant manner. However, compliance is only part of the equation. Multinationals must also consider the impact of their tax practices on their reputation and their relationships with stakeholders such as governments, shareholders and the general public. A company that is perceived to be paying its fair share of taxes is more likely to benefit from the goodwill of all parties involved.

A practical approach to establishing a sound tax governance strategy

To avoid these risks, companies must ensure that their tax practices comply with government regulations. This includes keeping accurate records, filing taxes properly, and paying taxes on time. In addition, businesses must have adequate internal controls to prevent and detect tax evasion.

The key elements of good tax governance are risk management, internal controls, transparency and communication, and accountability.

  • Risk management identifies and manages risks that could impact an organization’s tax liability.
  • Internal controls help ensure that the organization’s tax compliance processes are efficient and effective.
  • Transparency and communication are important to ensure that all relevant stakeholders understand the organization’s tax strategy.
  • Accountability ensures that the organization is held accountable for its actions in tax matters.

Tax technology and its impact on tax governance

Technology has always played a role in tax governance, from the early days of ledgers and quill pens to the sophisticated computer systems of today. However, the recent proliferation of tax technology has profoundly affected the way taxes are administered. By automating many tasks associated with tax compliance, tax technology has enabled tax authorities to process more returns in a shorter time. Additionally, tax technology has helped improve the accuracy of tax data, making it easier for authorities to identify and collect unpaid taxes. As a result, tax technology has had a significant positive impact on tax governance. While its implementation still presents challenges, there is no doubt that tax technology will play a vital role in helping multinationals meet increased tax reporting and compliance obligations.

How to stay ahead of tax governance and technology

Tax technology is constantly evolving and it can be difficult to keep up to date with the latest developments. However, there are a few key ways to stay ahead. First of all, it is essential to keep up to date with new tax laws and regulations. The Wolters Kluwer iKnow research platform is a great resource for keeping up to date with the latest changes. Finally, it is also useful to use corporate tax software such as CCH Integrator, which is regularly updated with the latest tax information and can help define the appropriate frameworks to meet the obligations of different sound tax systems. This ensures that you always use the most up-to-date tax data and calculations. By following these tips, you can ensure that you are always one step ahead of your tax obligations.

CCH Integrator — the global tax compliance and reporting platform

Corporate tax technology such as Wolters Kluwer’s CCH Integrator can help companies put the necessary frameworks in place to ensure our business is compliant with tax authorities and regulators around the world. CCH Integrator provides a complete solution to manage tax compliance, from initial data collection and analysis to filing and payment of tax returns. The software is designed to help businesses streamline their tax processes, improve efficiency and reduce the risk of errors. In addition, CCH Integrator offers robust reporting and analysis capabilities that can help companies identify savings opportunities and improve their overall tax situation. With the right corporate tax technology in place, businesses can focus on what they do best: growing their business.

Helen D. Jessen