Richard Cornelisse

Setting the Objectives Of The Tax Function

In Audit Defense, Benchmark, Business Strategy, EU development, Indirect Tax Automation, Indirect Tax Strategic Plan, Processes and Controls, Technology, Training on 18/02/2012 at 1:21 pm

By Richard Cornelisse

The Tax Function has to contribute value to the company’s business strategy. The posting “Is ‘Google’ The Tax Adviser Of The Future?” is about social media and technology developments.  It deals with the entry in the market of non traditional competitors and the impact on business strategy. It includes success stories of such entries. How we see the market develop, have we made the right choices, do we need to set new business priorities? Today’s Blog is about aligning the tax strategy to the business strategy.

As tax management is part of something much bigger the idea behind the “Google adviser’ Blog was to get readers to walk with me for a bit and facilitate thinking outside the box re business strategy and objectives. Look beyond tax and focus first on a company’s business strategy.

For the indirect tax specialist, you read ‘free of charge’ in that Blog, what scenarios are in play?  Such way of thinking is important if the company’s business model changes.  The tax strategy and objectives should be aligned with any new business priorities set.

Lets assume that the business objectives is to realize cost efficiencies or increase market share via takeover(s). From a tax perspective the difference between future firefighting or being in control has to do with being involved and the timing of that involvement. A tight connection to the business units and their decision making process is essential. Some soft skills are necessary to make that happen.

I have addressed the ‘why’ and ‘how’ and provided leading practices in my articles about Shared Service Center and M&A Integration.

The Objectives Of The Tax Function

Assume that a Tax Function of a company works under the same market principles as tax advisers and that the clients are the executive, finance, procurement, IT, logistics, internal audit, HR, legal etc.

What do you consider the requirements for customer satisfaction?

Jack Welch is a role model for many. His mission statement was “boundarylessness”:

“break down barriers and improve teamwork up, down, and across organizational lines.  In his view a considerable amount of money is lost due to disconnects or competition between groups that should be working for a common cause: providing value to customers.”

Is everybody’s added value in a certain business process known and communicated?

If not is that something that should be managed top down, bottom up or both?  If the company’s culture has to change the only way is a top down approach. That means that the executive has to be actively involved in order to optimize the success rate.

That is exactly the reason why improvement or remediation of a company’s tax control framework does not work without a good flavor of Jack’s “boundarylessness”.

The level of client satisfaction should in my view at least meet the following requirements:

  • Contribute value to achieving the companies business objectives
  • Manage ongoing risks and opportunities
  • Ensure compliance with tax laws and reporting

How do you see this?

Indirect Tax Objectives

Assume that the executive has validated  the company’s tax strategy. Subsequently, the performance requirements for indirect tax has to be established and translated to indirect tax objectives (Indirect Tax Strategic Plan). The following could be used as guideline:

  • Tax Planning: identify, recommend and successfully implement indirect tax projects that assist in achieving the objectives of the indirect tax department part of the business objectives.
  • Tax Accounting: proactively anticipate on changes in the business and outside the business and successfully communicate these changes to the concerning departments. Furthermore look after a correct implementation of these changes.
  • Tax Compliance: look after a correct, complete and timely Indirect Tax reporting of all entities. This includes that additional reporting relating to these Indirect Tax returns is taken into account.
  • Tax Governance: all corporate departments are well informed and/or have the availability of a VAT work instruction so it is clear when to consult the indirect tax department.
  • Support Other Departments: activities of departments that are being affected by VAT risks have been successfully identified and these departments have been well instructed to reduce these risks.
  • Audit Defense: roles and responsibilities have been determined who deals with the tax authorities during an audit (announcement) and tax authorities questions and procedures “how to act” (e.g. never provide documents without first making copies) have been documented and rolled out.
Other Sources
  1. The Future Tax Function: KPMG’s Framework For Change (published June 2012) 

Richard Cornelisse is CEO of the KEY Group and worked previously as Big4 Partner in the Tax Performance Advisory and Indirect Tax Practice and blogs on Tax Function Effectiveness and Tax Control Framework developments.

  1. […] From Setting the objectives if the indirect Function (by Richard Cornelisse): […]

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