Improving accountability


It is now probably fair to say that the management of tax is one of the key criteria by which corporate governance is judged by investors and other third-parties, such as regulators, analysts and the media.

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Since our last survey in 2009, boards and finance executives are clearly responding to the world’s tax authorities’ rising focus on the management of tax.

The current survey shows senior executives and directors are taking more interest in, and responsibility for, tax matters. Meanwhile, tax directors are getting better at articulating and gaining formal approval for the tax strategy.

Encouragingly, a high proportion of respondents report the existence of formal KPIs across a wide range of tax department activities. Consistent with the priority given to compliance and reporting, the highest degree of KPI setting relates to this activity.

Since 2009, companies have acted and are centralizing the management and structure of resources in global or business-wide headquarters tax departments. This centralization can support desired improvements in accountability, control and standardized approaches.

Of the 19 percent of respondents who expect changes to their tax department’s structure in the near future, 50 percent of them say that better alignment with the business and/or the finance function is among the primary reasons. However, better integration is still a lower priority in driving upcoming structural projects than improving controls, reducing costs, and improving/creating efficiencies. For tax departments that will restructure in the near future, “cost reduction” is the reason with the greatest increase since 2009.

Some statistics

  • The percentage of respondents who have a tax strategy that is consistent with their overall business strategy rose from 84 percent in 2009 to 93 percent in 2012.
  • Over 75 percent of respondents have KPI's relating to tax compliance and reporting, whereas only 57 percent have KPIs over process and technology improvement and only 62 percent have KPIs over cash tax saving or deferral.
  • 73 percent of respondents said that the board and/or corporate leadership are directly involved in providing guidance on the tax strategy – a significant increase from 2009 (51 percent)
  • 77 percent of respondents say their board has approved the tax strategy, up from 48 percent in 2009.
  • In 2009, 56 percent of respondents said that their tax department was directed, managed or coordinated from their global headquarters, compared to 76 percent in 2012.

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