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Every business organisation requires a responsible approach to the management of taxes, which is able to deliver sustainable outcomes that are right for the business.
Definitions
Tax policy refers to the governance framework that sets standards for the way tax decisions are made and subsequent activity executed. It formally sets out the organisation’s standards, accountabilities and key policies for the management of taxes.
A tax strategy is the plan, based firmly on the data and facts of the business, which sets out the tax decisions made in supporting the organisation’s goal.
Tax risk is the risk of non-compliance with tax law and regulations.
Do you have an organisational tax policy document?
Your organisation’s tax policy and the process of its development should clearly direct the business’ tax choices by defining the organisation’s goals and attitude to tax risk. Businesses operating without a tax policy may suffer the risk of missing out on tax efficiencies or government incentives.
An appropriate tax policy provides confidence to external stakeholders that tax risks have been considered and addressed. Sometimes, this allows the tax authorities (ZIMRA) to adopt a more relaxed approach to tax compliance obligations, for example, a significant reduction in penalties on historic tax issues or acceptance of a tax payment plan for outstanding past tax obligations.
What is your tax strategy?
Many governments, shareholders and boards of directors are changing their attitude towards the management of tax. In the current global business environment, managing tax risk is an issue high up on the agenda. Every business organisation is looking for optimal tax solutions in meeting compliance obligations while being efficient and cost effective. According to the experience of most tax practitioners, setting a tax strategy and implementing it are the building blocks to success.
How do you make it happen?
- Establish a clear tax vision and strategy aligned to the business objectives of the wider organization, which articulates how the tax function will deliver value.
- Determine your appetite for risk including reputational risk.
- Implement processes and controls to manage your tax risks.
- Gain visibility over your tax data and develop a strategy to communicate your tax position.
- Create the right operating model for your tax function mapping out the people, processes and technology you need to efficiently deliver the agreed tax strategy.
- Implement a governance and control framework that defines which taxes the tax team are responsible for.
- Benchmark your tax function and put in place relevant KPIs (key performance indicators) to drive the right behaviour and demonstrate success.
If your business requires a tax policy and strategy, consult your preferred tax consultant or contact Nonhlanhla via e-mail or phone on taxitzim@gmail.com / 0784 919 645.
References
1) Responsible Tax: Sustainable Tax Strategy.
Source: Deloitte
www.deloitte.co.uk/responsibletax
2) Tax Management Consulting: How can you be more efficient at managing tax?
Source: KPMG International
Publication number: 131317A Publication date: July 2014
