Why the need for tax risk management?

Transcription

1 Tax risk management

2 Why the need for tax risk management?

3 The tax landscape has changed Economy contracted Increased revenue targets Revenue collection under pressure SARS headcount remains unchanged Technology and the information age Drive towards transparency and tax morality More aggressive SARS/Increased disputes SARS requesting information from advisors Complex legislation (BEPS, TP, WHT, deductibility ceilings, CbyC) Information exchange: governments and government institutions TAA is a one way street (prescription, legal privilege, info gathering) Tax departments are required to do more with less

4 Why Tax Risk Management Drive to governance, tax transparency and tax morality In SA: King IV Tax has become a complex matter with various dimensions. The governing body should be responsible for a tax policy. The policy should be compliant with the applicable laws, but also congruent with responsible corporate citizenship, and that takes account of reputational repercussions. Responsible and transparent tax policy is put forward as a corporate citizenship consideration. In the UK: Consultation Paper In Australia: Tax evaluation based on rating

5 Why Tax Risk Management What do the numbers tell us? Description Amount Turnover Cost of sales - Salaries Other cost Overheads Net income

6 Why Tax Risk Management What do the numbers tell us? Description Amount Tax description Potential tax Turnover Output VAT Cost of sales - Salaries PAYE (average 30%) Other cost Input VAT Overheads Input VAT Net income Income tax

7 Why Tax Risk Management What do the numbers tell us? Description Amount Tax description Potential tax Turnover Output VAT Cost of sales - Salaries PAYE Other cost Input VAT Overheads Input VAT Net income Income tax

8 Why Tax Risk Management What do the numbers tell us? Description Amount Tax description Potential tax Turnover Output VAT Cost of sales - Salaries PAYE Other cost Input VAT Overheads Input VAT Net income Income tax Total taxes managed Percentage of Turnover 37%

9 Why Tax Risk Management What do the numbers tell us? Description Amount Tax description Potential tax Turnover Output VAT Cost of sales - Salaries PAYE Other cost Input VAT Overheads Input VAT Net income Income tax Total taxes managed Percentage of Turnover 37%

10 What is tax risk management?

11 Simplistically tax risk management is the proactive management of the tax life cycle What is the tax life cycle?

12 The tax life cycle Negotiation to conclusion to post implementation Direct and indirect taxes Transaction is processed Disclosed (including tax) in AFS Tax reporting: Board & Audit Committee Communication with SARS Transaction Technology Strategy, Policies and Processes Includes Compliance, queries, objections, controversy, disputes etc with SARS

13 Simplistically tax risk is the proactive management of the tax life cycle as a business risk through the implantation of embedded strategies, policies and processes

14 Simplistically tax risk management is the proactive management of the tax life cycle as a business risk through the implantation of embedded strategies, policies and processes Cutting through the complexity of tax management.

15 Tax risk manageme nt

16 Tax risk management Tax Strategy 2016 KPMG Services Pty Ltd, South Africa, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved..

17 Tax risk management Strategy Policy 2016 KPMG Services Pty Ltd, South Africa, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved..

18 Tax risk management Strategy Policy Control Environment 2016 KPMG Services Pty Ltd, South Africa, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved..

19 Tax risk management Strategy Policy Control Environment Governance 2016 KPMG Services Pty Ltd, South Africa, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved..

20 Organisational Structure Tax risk management Strategy Tax Policy Control Environment Governance

21 Tax risk management No to limited in house tax Local tax with some standardised processes Tax Centre of Excellence with established tax operating model

22 Tax risk management Purpose of the CoE Overall responsible for the strategic direction of the Group around taxes and tax governance. Tax CoE to define, communicate, implement and ensure adherence to tax principles, strategies and policies. Benefits of a CoE Increased focus on the strategic direction of Group around taxes and tax management Ensuring alignment with the Group s strategic agenda Group manages tax consistently and clear guidance is provided resulting in clarity and certainty. Increased organisational awareness of taxes, tax strategies and policies CoE provides clear local and global reporting lines Improved corporate governance and governance around taxes. Robust assurance to stakeholders that taxes across the group are managed, monitored and controlled effectively and efficiently. More focus and resources on value creation initiatives Improved communication internally (boards and audit committees) and externally (with the revenue authorities). Tax consequences of proposed transactions have been addressed timeously Pro-active identification and addressing key risks, changes to the tax legislation, tax planning opportunities, compliance and controversy Increased protection of the Group s reputation and reduced risk of negative press coverage with regard to taxes Improved and focused relationships building within organization and with tax authorities including pro-active relationships management CoE will ensure that processes are standardised, risk-based and integrated with wider enterprise More focused approach around the tax technology policies, outsourcing and co-sourcing. Participation in discussions / lobbying and the development of proposals with national and international organisations, to shape the future of tax legislation

23 Organisational Structure Tax risk management Strategy Tax Policy Control Environment Shadow Tax Governance

24 Organisational Structure Tax risk management Strategy Tax Policy Control Environment Governance Shadow Tax Advisor

25 Organisational Structure Tools & Technology (T&T) Tax risk management Strategy Tax Policy Control Environment Governance Shadow Tax Advisor

26 Organisational Structure Tools & Technology (T&T) Tax risk management Strategy Tax TT Strategy Policy Control Environment Governance Shadow Tax Advisor ID new Technolog y Integrate with finance Reason to implement

27 Organisational Structure Tools & Technology (T&T) Tax risk management Strategy Tax TT Strategy Policy Control Environment T & T Governance T Shadow Tax & T Advisor ID new Technolog y Integrate with finance Reason to implement

28 Organisational Structure Tools & Technology (T&T) Tax risk management Strategy Tax TT Strategy Policy Control Environment Governance Shadow Tax Advisor ID new Technolog y Integrate with finance Reason to implement

29 Organisational Structure Tools & Technology (T&T) Tax risk management RISK MANAGEMENT Strategy Tax TT Strategy Policy Control Environment Governance Shadow Tax Advisor ID new Technolog y Integrate with finance Reason to implement

30 Organisational Structure Tools & Technology (T&T) Tax risk management RISK MANAGEMENT Strategy Tax TT Strategy Policy Control Environment Governance Shadow Tax Advisor ID new Technolog y Integrate with finance Reason to implement CREATE/ ADD VALUE

31 EFFECTIVENESS Organisational Structure Tools & Technology (T&T) Tax risk management RISK MANAGEMENT Strategy Tax TT Strategy Policy Control Environment Governance Shadow Tax Advisor ID new Technolog y Integrate with finance Reason to implement CREATE/ ADD VALUE

32 EFFECTIVENESS Organisational Structure Tools & Technology (T&T) EFFICIENCY Tax risk management RISK MANAGEMENT Strategy Tax TT Strategy Policy Control Environment Governance Shadow Tax Advisor ID new Technolog y Integrate with finance Reason to implement CREATE/ ADD VALUE

33 Approach to tax risk manageme nt

34 Approach to tax risk management Where you are now

35 Approach to tax risk management Where you are now Where you need to be

36 Approach to tax risk management Where you are now????? What steps????? Where you need to be

37 Question s

38 Thank you

39 Presenter contact details Joubert Botha Director: Tax Services Mobile:

40 2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.