Towards greater collaboration: The evolving partnership between business taxpayers and tax authorities
The overarching objectives of most tax administrations are to ensure compliance with tax laws and to facilitate taxpayers’ experiences on their journey to comply. In recent years, with an increasing emphasis on corporate governance, financial/ public disclosures, and evolving accounting standards, authorities have stepped up their efforts to improve relationships with taxpayers, collaborating with companies to uncover any tax uncertainties and providing expanded assistance to ease their administrative burden.
Tax authorities have developed more sophisticated risk management tools, a readiness to differentiate between high and low-risk taxpayers, and a friendlier audit approach to those classified as low risk. Moving the relationship towards a true partnership based on honesty, mutual understanding and a willingness by both parties to engage in a constructive dialogue. Doing so is worthwhile. Creating a positive partnership between both parties benefits all involved. It reduces tax uncertainty for the businesses and enables the authorities to concentrate their resources on high-risk issues.
At the recent Tax Transformation Summit in London, tax professionals from the world’s leading brands came together to discuss today’s hottest topics in the tax function: transparency, transformation and technology. Remco Dewaerheijt, VP Tax & Product Strategy for VATBox, hosted a panel where John Shuker, Indirect Tax Partner at PwC, discussed the trends in the changing partnership between business taxpayers and the authorities and how the advisory profession has a key role to play in facilitating the dialogue and acting as a bridge between taxpayers and tax administrations.
Mr Shuker shared his experience about how, as an intermediary tax advisor, he helps the world’s leading brands strike the right balance in complying with the rules set out by tax authorities. He highlighted that technology represents both a blessing and a challenge and that taxpayers and tax administrations must work together to ensure compliance. He discussed the shift by tax authorities to take an interest in transaction-level data, which has proven to be a real challenge to both small businesses and large companies.
To strike the right balance, Mr Shuker explained that companies need greater dialogue with the authorities, expert tools and innovative solutions to help them report their data, and simplifications to enable their compliance. “We need to make sure that companies continue dialogue with the tax authorities and vice versa. There’s quite a lot of variables that we all see more of in the future. But I think [the way forward is] dialogue with the tax authorities, better systems and more real-time reporting and simplifications. Overall, a lot of dialogue is a good thing.”
What businesses gain from an enhanced partnership with tax authorities
- Certainty and clarity in relation to tax issues
- Help with reducing compliance costs
- Access to the decision-makers in tax administrations
- Consultation on tax policy issues
- Real-time mechanisms for fast resolution of issues
- More customer-centred approach
What tax administrations gain from enhanced relationships with businesses
- Full transparency and disclosures by businesses
- Respecting “the spirit of the law”
- Open and transparent dialogue
- Cooperation in tax risk assessment
- Assistance in understanding the business and its governance
Mr Shuker conceded that the easiest way to achieve tax compliance often involves integrating new systems and looking at new solutions. He makes the point that VATBox is a disruptor in this market.
To learn more about how VATBox’s innovative solution empowers financial professionals to make strategic decisions based on their transactional data while ensuring unrivalled compliance and savings, click here.
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