Forget about consumer trust, can you ‘justify trust’ in your tax governance?
Consumer trust in the health and pharmaceutical sector remains low relative to other industries globally. Consumers are concerned about highly priced prescription drugs, perceived unethical marketing practices and maintenance of data confidentiality. And it’s not just consumer trust that an organisation needs to be concerned about.
Globally the tax landscape continues to rapidly evolve as the public and tax authorities increasingly scrutinise the amount of tax paid by multinationals, particularly pharmaceutical companies. The demands of regulators are intensifying with an increased focus on taxpayer governance, tax data quality and integrity. There are increased expectations from stakeholders for organisations to demonstrate that their tax policies and conduct aligns with the spirit and intent of the law, and meets the expectations of the public.
In Australia, the Australian Tax Office (ATO) is focused on board accountability for tax and ensuring organisations can sufficiently evidence compliance with their tax obligations and are paying the right amount of tax on economic activities within Australia. By 2020, the ATO will have undertaken Justified Trust or Streamlined Assurance Reviews across the top 1,100 organisations examining their tax governance and risk. The program will impact more than 200 pharmaceutical and medical devices companies operating in Australia.
These Justified Trust Reviews will impact the organisation’s risk ratings and ATO audit activity, not to mention the impact on reputation and increased penalties for non-compliance. With this in mind, it is interesting to note that:
So the good news is, if you are not yet meeting the ATO’s standard of ‘justified trust’, you are not alone. The bad news is, if you are a large organisation, it’s a matter of when, not if, the ATO asks you to establish ‘justified trust’.