It is important that hard copies and electronic corporate documents, tax files, and tax records are organized and retained and accessible and for example not stored on employees’ hard drives. Besides easily accessible it should be backed up under company’s IT policy. Tax audit adjustments including settlements are documented and archived for future use.
When no documentation exists for critical tax processes tax authorities or corporate record retention requirements have not been considered it is important to set up a process for documentation. This process should be reviewed frequently and has to be updated for changes in operating environment.
Effectiveness of the tax department could be improved when the tax department has adequate supporting technology and tools and/or systems that don not need significant manual input. Tools and technologies are used in an integrated manner and tax data is only collected once and reused.
The indirect tax department formally engages with key stakeholders on a regular basis to exchange knowledge and such contribution are supported by technology.
ERP and other systems are properly configured for VAT to support compliance, financial reporting and planning and there is dedicated IT support for tax.
The tax department has access to critical systems and applications and the right VAT configuration is implemented and maintained accordingly moving forward.
A substantial improvement is available if technology tools and systems to increase effectiveness and reduce risks could replace spreadsheets.
Systems and processes should also be in place to maintain critical data needed for tax and strategic decisions on a periodical basis considering reporting, compliance, auditing and planning needs.