Effectiveness and efficiency of operations, the reliability of tax reporting, and compliance with applicable laws and regulation
Assume that a Tax Function of a company should work under the same market principles as tax advisers and that the in-house customers are the executive management, finance, procurement, IT, logistics, internal audit, HR, legal etc.
Customer satisfaction is achieved by managing the expectations and relationships of internal customers, tax authorities, external auditors and other stakeholders
The first is to determine the requirements of client satisfaction of senior management (C-level). Based on the above it seems that C-level executives consider indirect tax of lower priority than the indirect tax function generally does. Is the root cause misinterpretation or not understanding and speaking the same language?
The next step – to achieve mutual understanding – is to get agreement with senior management at the level of indirect tax risk appetite of the company in the worst-case scenario.
- Review the categories of VAT risk the company is facing as well as the likelihood of occurrence, its potential impact and mitigation measures
- Review the company’s risk appetite and risk tolerance and the way in which risks is measured
If you know the risk appetite, you have to identify the lowest performing indirect tax processes that have the most direct impact on the company’s business objectives (e.g. benchmark and measure), short problem statements for the gaps found should be written.
Indicate how long the problem has been going on, describe the gap between the current and desired state, describe the impact of the problem, perceived solution or root cause. It should also include an estimate of savings or the amount of hours currently lost due to rework.
Identify a problem, measure its magnitude, determine why the problem exists, and generates a set of solutions to ensure that the problem goes away
These statements can subsequently be prioritized and validated with top management. Various solutions are presented with cost-benefit analysis, so a constructive discussion with top management can be held about what is needed to close these gaps (e.g. budget and/or resources needed or necessary for change of systems, processes and controls etc.).
In the worst case the gap(s) will not be closed, but at least you have achieved mutual awareness and hopefully responsibility.
However, if the problem is material and addressed in the right way it will more than likely be dealt with accordingly, because it has now become a mutual responsibility.