Should Your Company Have A Tax Risk Policy_

1. Should Your Company Have A Tax Risk Policy?

2. Fast becoming a regular and important topic discussed among organizations today, tax risk is a concept many more business people are familiar with. If your business operates across a state line, or internationally, you may be at risk of triggering certain tax liabilities in those jurisdictions where you don’t have a physical presence. Not only that, but because an increasing number of countries are putting policies in place that require higher levels of transparency in the way in which taxes and finances are reported, tax administrations can access more details to help them raise issue assessments and investigations.

3. With companies nowadays placing extra focus on fiscal transparency and social responsibility, tax risk policies are proving to be increasingly beneficial, and can help businesses better manage tax risk. Let’s look at tax risk in a little more detail: What is tax risk? When a company underreports its’ tax obligations in regulatory filings, such as in tax or financial statements, theyare at risk of incurring extra taxes, additional interest and even penalties; this is known as tax risk.

4. Tax risk also includes a company potentially having to pay more taxes than they otherwise would have legally owed, due to their failure to take up tax planning opportunities, or the lack of a robust tax strategy (or both). For companies involved with multi-jurisdictional transactions, cross-border transactions, complicated supply chains, a large number of remote employees, or digital operations, among others, tax risk is significantly heightened. Should a business fail to effectively manage tax risk, it also puts itself in a negative position in terms of its reputation with stakeholders and investors, or tax administrations.

5. What are the benefits of putting a tax risk policy in place? A policy addressing tax risk is best included as part of a company’s overall tax policy, and can help ensure that the businesses tax behavior is aligned with their risk profile, overall. Provided a tax risk policy is comprehensive and implemented properly, it can also bolster tax risk awareness throughout the organization as a whole through more effective communication, controls and processes that include tax strategy executive oversight.

6. Here's what should be included in a tax risk policy: A tax strategy that is clearly articulated, and has been approved by the company at management level and the board of directors Internal control policies, processes, and review and oversight procedures surrounding the reporting and planning of taxes, that are robust and which can be shared with stakeholders and tax authorities Resources, training and technology that are sufficient for a tax department, along with a set of clear and well-defined roles and responsibilities for all personnel within that tax department ● ● ●

7. A policy that clearly sets out the way in which the company approaches interactions that may take place with regulators and tax authorities Regular communication with leaders of the company and board members regarding the businesses tax strategy, along with procedures to ensure that when business planning, tax risk is given due consideration ● ●

8. To conclude: Reflecting the way in which a company operates, and articulating its tax strategy and vison, a tax risk policy that’s consistent with the broader business policies of the organization, can be extremely beneficial, and if you would like help setting up such a policy for your company, reach out to a tax professional for further guidance.

9. At Heyer Inc, we proactively assist our individual and small business clients in meeting their goals. Our key area of focus is ensuring that our clients remain compliant with federal and state tax laws by providing them with high quality accounting and tax services Miami. If you are looking for an individual accountant in Miami, heyer inc would be a right option.