Hi, my name is David Drummond and I am National leader for KPMG of our Tax Management Consulting services.
In the current tax environment, we have seen increasing focus both in Australia and around the world in relation to tax transparency, requiring companies to disclose their tax payable income reported, through the revenue authorities for the countries in which they operate.
There's also increasing focus on base erosion and profit shifting around the world, and also tax morality, the questions of ethics, that companies should pay the right amount of tax. All of those questions are focused on ‘what’ tax is paid and ‘where’ that tax is paid.
Tax Management Consulting is focused on ‘how’ organisations determines where and what tax to pay. In that context we have seen revenue authorities increase their focus on compliance activity in real time with organisations, through annual compliance arrangements, pre lodgements compliance reviews and reportable tax position schedules.
In that context, the ATO and other revenue authorities around the world have increasingly paid attention to how organisations determine the tax they pay through looking at their tax risk management and corporate governance frameworks. Understanding those frameworks, requiring companies to demonstrate those frameworks, and importantly for organisations to understand substantively testing the application of those frameworks to major transactions and more material tax risks confronted by an organisation in their business.
Tax Management Consulting, therefore, assists companies in focusing in areas where, perhaps, tax technically we haven’t been required to focus before. To what extent, for example, should tax be the subject of inclusion in an internal audit program? To what extent should a company have a written board-endorsed tax risk management and corporate governance framework? And to what extent, in compiling with requirements to respond to an obligation to file a reportable tax position schedule, should an organisation undertake a mapping of its processes and controls and systems to ensure that the organisation appropriately completes that schedule, particularly when the public officer signing that schedule is often not the head of tax of the organisation?
If I can just leave you with one parting observation it’s this: that revenue authorities have finally recognised that ‘how’ organisations determine to pay is as critical as to ‘what’ tax they pay and ‘where’ they pay it.