Canadian C-suite must prepare as tax controversy heats to boiling for 56% of companies: Ernst & Young survey

CFO buy-in critical for overall success

CALGARY, Nov. 16, 2011 /CNW/ - With converging trends creating the riskiest tax controversy environment in years, 56% of Canadian companies have already seen a rise in the volume or aggressiveness of tax audits, Ernst & Young finds in a new survey. And C-suite executives must understand the full implications to navigate this uncharted territory effectively.

"Ongoing economic uncertainty isn't the only legacy left behind by the financial crisis," says David Robertson, a tax litigator and partner at Couzin Taylor, a national law firm allied with Ernst & Young. "A new era of tax scrutiny is upon us after global governments moved to deficit financing to reignite their economies and companies sought economic growth in new markets with uncharted tax regimes."

Robertson says it's not enough to have tax on your priority list anymore. To avoid exposing your company to risk, tax needs to be a leading focus area for C-level executives and boards, including the CFO.

Ernst & Young's 2011-12 Tax risk and controversy survey: a new era of global risk and uncertainty shows that 57% of all global companies interviewed saw the same increases as the Canadian contingent. That number jumps to 75% for large companies with revenues over $5 billion. What's more, 97% of tax administrators interviewed globally will increase their focus on tax risk related to international structures and cross-border transactions in the coming three years.

While 77% of all companies agreed or strongly agreed that tax risk and controversy management will become even more important to them, only 50% of all CFOs subscribed to that same viewpoint.

"Bringing the C-suite in on these discussions is more important than ever as the Canada Revenue Agency installs new programs focused on tax governance and risk management," says Robertson. "Canadian businesses - including their senior executives - must be prepared to answer tougher questions around their tax administration if they want to survive and thrive in this new landscape."

According to Robertson, focusing on five key pillars can help establish the right kind of foundation for these discussions:

  1. Adopt a global approach to tax risk and controversy management.
  2. Evaluate resources, processes and systems for global tax risk management.
  3. Address tax risk and controversy at a strategic level — and execute well.
  4. Make strong corporate governance in tax a priority — because it is to tax administrators.
  5. Stay connected with complex, voluminous and fast-paced change.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

For more information, please visit ey.com/ca.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

SOURCE Ernst

For further information:

Amanda Olliver
amanda.olliver@ca.ey.com
416 943 7121   
    Julie Fournier
julie.fournier@ca.ey.com
514 874 4308    
    Sarah Shields
sarah.j.shields@ca.ey.com
604 648 3607

 

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