LARGE ORGANISATIONS are ill-prepared for the government push for greater tax transparency, according to a study by Thomson Reuters.
The study, which included the heads of tax of more than 100 global organisations, discovered that a mere 35% have, or are in the planning stages of having, a tax transparency strategy.
“The majority of organisations surveyed are concerned that increased transparency will result in a significant administrative burden.” said Charlotte Rushton, managing director Asia, Pacific and EMEA, for the tax and accounting business of Thomson Reuters.
More than half (52%) said they believe that tax transparency would add administrative strain to the tax department. This added stress was also highlighted by 39% of the organisations surveyed, who said that a lack of resources in the tax department would impair their ability to implement new tax transparency strategies.
This is contrary to the governments aims according to Rushton, who highlighted that moving towards new regulations was to be “as seamlessly as possible and with the least amount of resource and administrative disruption”.
Despite 62% understanding the implications of tax transparency on the tax department, a staggering 50% of organisations have not budgeted for increased cost to meet the new strategies.
Rushton also said: “It’s no longer a case of ticking the local tax box, companies need to be comfortable and confident if they come under scrutiny no matter where they do business”.
However organisations showed a lack of confidence, with 65% expressing the need for guidance and advice with the management of tax transparency from government organisations.
This lack of confidence does not mean a lack of enthusiasm, 36% of organisations involved in the survey consider tax transparency to be very important, against only 7% who think it is very unimportant.
“Our findings suggest that there is a risk that many could find themselves on the back foot if they do not start planning their transparent tax strategy soon,” said Rushton.
The survey also revealed that 47% of organisations said that new tax transparency strategies were implemented to meet corporate social responsibility obligations, while 41% answered ‘n/a’ due to lack of existing strategies within the organisation.
For larger organisations the new tax transparency plans could be a problem, 45% expressed that a lack of visibility of consistent tax information across the organisation would be a major obstacle to improved tax transparency.
Rushton spoke about the pressures upon organisations, saying that tax authorities are “becoming more aggressive and focused,” she also suggested that this would increase the “disclosure and transparency requirements on the business community”.
MTD represents 'the single most significant change to the UK’s system of taxation in recent times', says Knill James partner Nick Rawson. So, how prepared are SMEs for digital tax reporting?
Steve Butler of Punter Southall Aspire highlights the importance of pension governance meetings to protect against mistakes and safeguard company reputation
The SME community voices concern about the chancellor's measures in the Spring Budget
Following chancellor Philip Hammond’s Spring Budget speech, we explore the key takeaways for businesses and individuals