Tax Governance

Gone are the days when tax was just another item to be managed and minimised. Whether it’s the quality of tax governance policies, issues around data quality, pressure to be transparent with tax authorities, and society holding businesses accountable to be compliant taxpayers, these issues have become the subject of increased scrutiny and must be proactively reviewed.

Inland Revenue’s recent Basic Compliance Package (BCP) questionnaire campaigns have further elevated the importance of having robust and well documented tax governance policies. To reduce the risk of penalties, businesses need to consider questions such as:

• Are the tax risks to be managed clearly defined and articulated?
• Are the roles and responsibilities for managing tax risks clear?
• What are the processes in place to identify tax risks and are there effective mitigation strategies in respect of tax risks identified?
• Are tax compliance processes/policies documented and regularly updated for changes in the business/tax legislation?
• Does the business test the accuracy/operation of its processes/controls?
• Does the business conduct regular health checks in respect of the various tax types reported on (particularly those tax types with no external tax advisor involvement)?

• It is an aspect engrained as part of Inland Review reviews going forward.
• It gives comfort to the Board and Management that tax obligations are being met and provides a clear steer on how tax should be managed.
• Investors, funders, and business partners are interested in how tax is managed and whether it is managed appropriately.
• External auditors ask questions around tax controls as part of the audit process.
• There are significant financial and reputational risks as the public and media have low tolerance for poor oversight to tax matters.

• We can help develop tax risk management frameworks (tax strategies and tax controls) that reflect specific business circumstances.
• We can design best practice tax controls, considering the technology, systems and people that underpin the tax function.
• We can review the operation of tax controls and conduct detailed reviews of tax processes and systems.
• Based on your specific needs, our subject matter experts can perform in-depth tax health checks to review the accuracy of controls as well as technical accuracy of prior tax positions taken. This may include a technology assisted data analytics review which may be particularly useful in respect of large datasets, to provide comfort over the underlying data.

Inland Revenue’s expectation is that tax risk management frameworks and underlying controls will be tailored to your business, rather than based on a standardised or “template” approach. KPMG’s approach is to work with your team in drafting/reviewing documentation and controls, and to seek feedback from a range of business stakeholders to ensure what is developed is fit for purpose and meets Inland Revenue’s requirements.  We will also work with you on any system/process reviews and health checks, to ensure that we understand the context of your business and any findings are practicable and actionable.

Please contact us to hear more on how we can improve the way you manage tax risk, and the value KPMG can add to your business.