Against the background of the global focus on trust in tax and tax transparency, the rise of purposive organisations and scrutiny by regulators, many organisations are reviewing and enhancing their tax governance frameworks.
Operating models and the performance of tax functions will likely receive renewed attention (as with other functions) in response to COVID-19. This comes as organisations were already expanding their purpose and community stance, measures to build business and operational resilience and adoption of new technologies – all of which have tax function implications.
From a pure tax governance perspective over recent years there have been initiatives concerning automatic data exchange between countries, reporting requirements such as DAC 6 in Europe, guidance on board and management level tax controls such as from the Australian Tax Office (ATO) in Australia and public transparency of taxation information.
Addressing this complex environment could be perplexing, but through prioritisation the most concrete activities can be put in place. In other words everything matters, but some matter more than others. In this report we review recent developments in tax governance and performance and highlight some of the potential areas of focus based on trends we are seeing in the market.
Beyond pure tax governance we explore considerations such as the effectiveness of stakeholder reporting, definition of key performance indicators and usage of enabling technologies as potential areas to improve performance.
In respect of tax governance and controls we set out areas of typically higher and lower areas of maturity that may suggest where more focus is required. Example areas of improvement for many groups includes control definition and controls in place for data.
We also explore the extent to which there are correlations in the maturity of tax governance and performance of tax functions by industry and size. In short we tend to see a stronger correlation to size than industry.
Equally we have seen how some of the smaller groups can be the most mature and best performing, which demonstrates perhaps the most important driver – purpose.
In particular purpose evidenced through ongoing sponsorship and profile of the tax function which is combined with day to day discipline, innovation and attention to detail; both defining and reflecting the 'DNA' of more mature and resilient tax functions. In other words everything does matter.
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