Over the past several years, the fields of corporate governance and social responsibility have risen in importance, compelling boards and finance executives to take more interest in and responsibility for tax matters within an organization.
Today’s businesses face increasingly rigorous regulation and growing pressure from a variety of parties within and outside of the company to demonstrate that they’re well-run, responsible organizations. The management of tax is now one of the criteria by which corporate governance is judged by investors and other third parties, such as regulators, the media, and especially the tax authorities.
And the emphasis on tax risk and governance is expected to get stronger. Unified by the Organisation for Economic Co-operation and Development's (OECD) Forum of Tax Administrators, the CRA, the IRS, and their counterparts are linking a company’s approach to tax and its relations with tax collectors with the quality of its corporate governance. The tax authorities are also influencing governments to enact stricter laws against companies that are seen as shirking their civic duty through inappropriate tax plans.