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 business-wide issue.
"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 management.
- 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 their organizations.
- 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 2012.
- 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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