Controversies between companies and tax authorities on the rise
TORONTO, June 3, 2013 /CNW/ - Tax controversies between companies and
the Canadian tax authorities are not uncommon, and are increasing,
according to Ernst & Young's latest Canadian tax governance survey. To
minimize the threat to a company, tax risk management needs to be a
"As many tax administrations adopt more aggressive audit approaches
toward large multinationals, it's critical that companies with global
operations stay informed of ongoing tax developments at home and
abroad, and bring leaders up-to-speed," says Fred O'Riordan, National
Advisor, Tax Services at Ernst & Young.
O'Riordan adds: "While Canadian companies are doing a good job of paying
more attention to tax risk management, many are still falling short
when it comes to increasing the awareness of tax risk in non-tax
business units, managing foreign tax risk and improving reporting
protocols to boards of directors, audit committees and the C-suite."
The Canadian tax governance survey reviews the level of tax risk awareness among all departments in
organizations, highlights the business areas that cause concern when
managing tax risk, identifies potential areas for improvement to
minimize tax risk, and reveals organizations' tax priorities and plans
for 2013. Highlights of the survey include:
Tax leaders still hold primary responsibility for executing tax risk
95% of tax groups, 91% of finance departments, 79% of the C-suite and
60% of risk management committees are involved in managing tax risks in
A surprising 56% of non-tax business unit leaders are unfamiliar with
tax risk management policies.
Half of survey respondents only report tax risks as needed, or never.
38% of respondents reveal a moderate to significant increase in
boardroom discussions concerning tax risk transparency and reporting in
54% of participants plan to improve existing tax risk policies and
procedures within their organizations.
Variation amongst tax software tools is starting to develop a footprint
in automating the tax provision process.
Cross-border and intercompany transactions, business reorganizations as
well as mergers and acquisitions are the top business activities adding
to the tax risk profile.
The tax function only spends an average of 7% of its time on tax risk
management and reporting.
Cash tax savings, timely and accurate tax compliance and managing tax
authority audits are respondents' top three priorities for 2013.
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SOURCE: Ernst & Young
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