As governments desperately seek all kinds of additional revenue, senior business professionals see the increased possibility of an audit by taxing authorities as the most significant tax risk facing their organizations today, according to a new survey.
Some 30 percent of more than 500 respondents polled during a recent webcast by KPMG’s Tax Governance Institute identified the possibility of a tax audit as their No. 1 risk. Also high on the list of anticipated tax risks were increased regulatory requirements (27 percent) and the accuracy of tax provisions (26 percent).
“As countries and states seek additional revenue, corporate tax executives are bracing for a round of heightened regulatory scrutiny,” said TGI executive director and KPMG principal Hank Gutman. “Companies know they will need to have documentation in place and accessible to demonstrate compliance with the many domestic and international tax requirements they regularly address in today’s global economy.”
Identifying and increasing the potential use of tax refunds, credits and incentives has been the top tax area of focus by companies in the past six months, according to 37 percent of respondents. Compliance and reporting has been the tax function most focused on by companies during the past six months, according to 44 percent of respondents, followed by enhancing tax savings (21 percent).
During the past six months, most companies (47 percent) kept tax department resources about constant, with 28 percent reporting a decrease in their in-house tax resources. A majority of companies (69 percent) view tax risk management as an integral part of their organization’s enterprise risk management policy.
Most companies (51 percent) said that reporting by the company’s tax function to the board and audit committee has remained about the same, while 18 percent said that such reporting has seen an increase over the past six months.
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