Businesses profit from taking risks. However, in order to profit, companies must assess their appetite for risk so they can determine the optimum balance between risks and opportunities. Some of these considered risks will be related to tax. The challenge for companies is to strike the right balance between risk and opportunity — essentially, they must learn to strategically manage tax risk.
As a result of business scandals such as Enron, the corporate world has changed dramatically — and risk management in all areas has climbed to the top of the agenda of most organizations. There is growing awareness that risk management, and in particular, good internal control procedure is more important.
Increasingly, senior management recognizes that tax is an area with its own unique risk profile(s) and thereby has started to consider how to document, monitor and report their tax risk.
Management should strive for a leading edge tax function which includes a tax risk management framework. The framework will enable the company to:
- Identify tax risk;
- Measure and set limits on tax risk;
- Monitor and manage tax risk; and
- Communicate tax risk with interested stakeholders.
How we can help:
PwC, a proven leader in enterprise risk assessment, has helped numerous clients successfully assess their risk and implement a sustainable enterprise risk management program. Our Tax and Risk Management professionals can assist companies in developing a flexible, focused, practical and comprehensive methodology to create a tax risk management framework that will endure in an evolving regulatory environment.
