Because of the “back office” nature of the business function, tax has traditionally flown under the regulatory radar and too often lent an effective camouflage to illegal and ethically questionable practices, such as money-laundering and obscuring income through profit-shifting.
Similarly, a lack of robust tax governance in the past has meant that many unintentional misdemeanours went undetected, often costing companies substantial sums due to incorrect rate calculations.
Corporate Australia is demonstrating its support of transparent reporting through the “Justified Trust” initiative and the Voluntary Tax Transparency Code, however there is unprecedented pressure to do more.
At the G20 summit in Argentina, the vital role that tax, accounting and auditing plays in fighting financial crime was discussed and the sentiment was shared by the International Federation of Accountants and the International Bar Association as they called for global collaboration in the fight against corruption.
In the investment world, global groups are also increasingly interested in tax transparency as part of a responsible investment strategy.
Brand damage is a huge risk for multinationals who continue to employ sophisticated tax-minimisation strategies, even if these activities are legal. Consumers see the paltry amount of tax paid by these companies as a deliberate snub to the communities in which they operate.
The corporate culture created and perpetually reinforced by a combination of conflicting systems, organisational goals, and business performance KPIs is a constant challenge to corporate governance.
From a tax perspective, there is no doubt that having processes in place for maintaining accurate records and reports, questioning and calling out anomalies through the audits is essential. And so is ensuring that these processes are facilitated by the right technological solution – one that accelerates the compliance process and allows employees to focus on the business’ strategic needs.
Later today, Max Thomas, Head of Business Development, Professional Segment, Tax & Accounting, Thomson Reuters will reflect on the challenges facing our profession, join a discussion about the future of accountancy and pose the question ‘Are you ready to leave the back office?’
Join Max at panel discussion ‘Small firm, big bang’, 1.45-3pm today.
This article brought to you by Thomson Reuters Tax and Accounting.