How is the tax function impacted by increased transparency requirements?

In pace with increased requirements for transparency, companies need to increasingly consider how to handle tax issues in their organization and how to implement any changes required within their tax function to meet those requirements. A central issue in this work is how a company should develop an approach incorporating increased transparency without, necessarily, exposing itself to additional risk.

PwC’s report, ”Global tax transparency and risk management”, is the second report in PwC’s report series – Tax Function of the Future. In this series, PwC reports on tax functions of the future and on methods for changing today’s tax functions in order to ensure that they comprise a strategic asset in the company’s future business operations. The focus of this report is on increased transparency requirements in the world around us and their impact on the corporate tax function.

The requirement of openly reporting, to a greater degree, relevant information regarding taxation is currently high on the agenda within a number of global organisations. At the same time, there is concern in many companies as to how transparent reporting of, for example, transfer pricing strategies and financial information, could be interpreted by the tax agencies in various countries. Furthermore, there is uncertainty in that the reporting of such types of information implies that the information is public knowledge, something that could lead to competitive disadvantages and, possibly, even damage to the company’s brand. Consequently, how companies are to address the demand for increased transparency without exposing themselves to risk, represents, a central issue.

In order to address these risks, companies should think strategically and creatively and, at the same time, they need to consider their organisation as a whole. A successful change in today’s tax function will provide value added to the company’s entire business operations in the future. Feel free to contact us if you are interested in our assistance in initiating this type of change, already, today.

Kim Jokinen and Tove Palm