Tax obligations are becoming more complex: focus on the church and the public sector

Whether due to the new VAT law or other (European) legal requirements: Public and church administrations are faced with increasingly complex tasks when managing their tax obligations. One thing is clear: if incorrect tax returns are submitted, there may be consequences under criminal law as well as fiscal and political consequences due to stricter case law. In light of this, the Institute for the Public Sector, which is sponsored by KPMG, examined how public sector organisations manage their tax challenges in organisational and procedural terms as part of the study ‘Tax obligations of public sector organisations’. The study was conducted with the support of KPMG's tax experts. 

The findings of the study can help to assess the development status of an organisation's own tax department. The practical insights thus enable financial managers, among others, to manage risk more effectively - whether at local authorities, federal and state administrations, social insurance institutions, universities or the organised church. 

• According to the respondents, the requirements for public sector organisations to fulfil their own tax obligations have increased significantly in recent years. The new VAT law is currently a particular challenge. 
• At the management level of the organisations, there is at least a basic awareness of the possible consequences of errors. The majority of public sector organisations have established personnel structures with tax expertise as well as initial organisation-wide processes to strengthen tax compliance.
• The results of the study suggest that, in view of the growing tax challenges in many public sector organisations, it is advisable to further strengthen the tax function with regard to structural, procedural and organisational cultural aspects. In focus: IT support, training programmes, development and expansion of risk management and tax compliance management systems. 
• Such measures can promote the anchoring of the topic in the overall organisation and sensitise employees to tax risks when making decisions. This is indicated by further analyses based on the study results.

About the study: In August and September 2023, a standardised survey was conducted among finance and tax managers in public sector organisations. Responses from more than 180 study participants were analysed.