The basis for sound tax-risk management is a tax-risk policy that needs to address what the strategic, operational, financial accounting and compliance tax risks are in the business and what the response is to those tax risks, if and when they occur.
Tax risk management is not about minimizing tax risk but about determining what level of risk is acceptable to the business, how internal mechanism is set to address such exposure, what response is required to identified tax risk and monitoring that such response is actually taking place.
These controls are easy to monitor but are time consuming and often regarded as a burden on the organization. Tax Risk Management is a first step to be able to demonstrate that the tax department is in control of the tax function. Also, it will make it easier to assign resources and budgets to the tax function without increasing the business’s tax-risk profile.
Tax-risk management is not only about documentation, but about making sure that your organization actively monitors and responds to tax risks, if and when they occur. It is about people, processes and technology.
- Past – Assessment Proceedings, Past litigation relating to Appeals, Re-opening of Assessments, Revisions, Tax Investigation, Pending refunds, etc.
- Present – Filing of return, Payment of advance tax/TDS, GST lower TDS certificates.
- Future – To take corrective action against risk exposure on the future course of business activities in terms of expected cash outflow once business resumes.
- Providing timely information and regulatory updates
- Analysis of critical aspects of key tax provisions
- Computation of fair taxes payable, filing of statutory returns, providing documentation support etc.
- Educating implication of economic changes (such as COVID-19 pandemic, long term recession etc.) and approach to safeguard taxes.
- Representation before tax authorities for tax assessments, refunds follow-ups, any tax reliefs, tax concessions etc.
- Providing documentation support with a view to defend tax litigation in future.
- Providing tax opinions on future business strategy such as Starting a company, Joint ventures and Business collaboration, Mergers and Acquisition, Business Re-structuring and Cross border transactions