What you need to know to keep your company safe
by Mark Friedlich, CCH Editorial Director for International Tax, Accounting and Audit, and Estate Planning
A major evolution is taking place on the corporate tax front. As a result of the (1) accounting and other scandals of the past decade, (2) new legislation and regulatory standards, and (3) the globalization of business, corporate tax and accounting departments will have to work far more collaboratively and transparently in the future. Three major factors are contributing to the heightened complexity:
The need for transparency. Once upon a time, the CEO would tell the head of tax what the company needed its effective tax rate to be. The head of tax would then go off and make that happen with whatever strategies he or she deemed necessary. Today, post-Sarbanes-Oxley and numerous regulatory developments, there can be no such mystery around corporations’ tax strategies. FAS 109 and FIN 48 require transparency around accounting for income taxes and uncertain tax positions, and there is far more attention paid to the various tax strategies and compliance methods of corporations by governments and regulators around the globe.
The globalization of business. The tremendous increase in cross-border transactions by corporations, along with the opening of new markets throughout the world, has changed the very nature of the corporate tax department — its functions, its responsibilities and its interaction with different parts of the corporation.
Increased liability. Senior executives and the board must personally sign off on the accuracy of their company’s compliance with complex tax and tax-related accounting rules around the world, and they face potential civil and criminal liability should anything run afoul of the law. Corporate tax departments can’t afford errors. They need real-time information and an efficient system that allows them to get to current and prior years’ rates and accurately forecast future tax rates and rules in all the countries in which they operate, both for their returns and their financial statements.
New technology has been developed to help companies deal with this heightened complexity. CCH’s Worldwide Tax Rates and Answers, for example, provides a wide range of information that tax departments can use to accurately comply with the constantly changing and complex tax rules in more than 100 countries. Tax professionals can immediately access the most up-to-date tax rates and rules as well as track tax legislation in countries throughout the world in order to stay abreast of not only what the current rates and rules are but what the future likely holds.
This story is from the CCH e-newsletter Figures, written specifically for corporate tax professionals. Figures offers tips, tricks and ideas about how to increase your organization’s productivity and efficiency. Every issue also features insights with a corporate tax professional