Compliance with legal requirements and obligations and systematic and preventive maintenance of the company's internal policies in the area of taxes is called tax compliance. The tax compliance management system (tax CMS) for the organizational implementation of management decisions based on principles, procedures and actions serves to ensure the efficiency and business transactions of the company.
New standards have been set in tax reporting due to the internationalization of accounting, tax legislation and complexity. Companies are increasingly exposed to the challenge of meeting the growing demands for implementing an effective tax CMS to monitor tax scenarios in the company.
Relevant monitoring scenarios mainly include the following:
- Identification, subject and assessment of tax risks for all types of taxes based on the tax objectives of the company
- An appropriate organizational structure and appropriate management processes that reflect the size of the company and the tax requirements specific to the company or industry
- Adequate documentation and communication of tasks, responsibilities and authorizations on the one hand, and tax processes on the other (obligation to keep records)
- Tangible and timely determination and implementation of legal and/or
- Regulatory changes in tax law or tax accounting
- Identification, subject and assessment of tax risks for all types of taxes
- Timely and correct tax reporting and tax forecasting
- The accurate calculation, assessment, classification and disclosure of tax liabilities and tax assets
- Timely payment of tax obligations, including withholding amounts and payment of withholding tax
- Submission of out-of-court and judicial remedies
- Accurate and complete calculation of tax reserves
- Efficient and effective fulfilment of cooperation obligations
- Risks of a dysfunctional tax compliance system
An effective tax CMS ensures the mitigation of the above risks and should be the focus of every company. One important foundational element of an effective tax CMS is a risk management and control system at the enterprise level that adequately reflects systemic process principles and legal requirements.
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We support you in determining your situation and in optimizing or implementing an efficient tax CMS
Focusing our activities on the basic elements of CMS according to IDW PS 980, we identify and analyze your fiscal goals and risks in cooperation with you, implement a holistic procedural approach in the tax area and cooperate with you on the development of standards for organizational structures in the tax process. This includes, for example, the development of organizational and technical instruments, such as manuals, guidelines, checklists and IT-supported tools, as well as methods for early risk detection, risk analysis and reporting.
If you already have the elements of a tax compliance system in place, we can identify existing deficiencies through a preliminary examination and submit proposals for completing the system. The broader examination aims to obtain information on whether your tax compliance system adequately covers existing principles and actions (concept audit) and is capable, with a reasonable degree of certainty, of timely identifying and preventing the risk of major violations (suitability test) and, in addition, whether the stakeholders take them into account within the framework of their responsibility (effectiveness test).
Effective support from BDO
Our interdisciplinary team of experts, who have acquired and consolidated their expertise in many years of practice, helps you design your individual tax CMS. Therefore, we can offer you solutions that are oriented to best practices but adapted to your needs and that are developed and agreed upon in cooperation with you.