How to develop a robust tax control framework for your business
Tax compliance
Developing and implementing a tax control framework (TCF) is a strategy being adopted by an increasing number of companies around the world.
There is no universal approach to developing a TCF. At Forvis Mazars, based on our wide experience working with a diverse range of companies to implement tax control frameworks, we take a structured, three-phase approach: preparation, analysis and implementation.
Preparation
The preparation phase is about understanding the company’s current state of compliance and governance in relation to taxation matters across seven core areas:
- Culture
- Objectives
- Organisation
- Risk
- Programme
- Communication
- Monitoring and improvement
We’ll organise workshops with the relevant people at the company to understand the approach to tax and find the answers to questions like what is the culture around tax? What are the objectives? How is the tax function structured? How are tax risks assessed? and so on.
We’ll then work together with the client to define the objective for their individual TCF. The main objective is compliance, including documentation, but we will also define secondary goals, such as optimising tax planning and process implementation, or realigning the tax function into a governance function. All this information is captured later in a single document.
Analysis
The next phase focuses on analysing the findings from phase one to identify the high-risk areas and any issues that need further investigation or refinement. This will include tax-specific risk analyses for all types of tax within the desired scope.
Through more workshops and collaborative working groups, we’ll jointly evaluate areas of risk potential and develop a risk matrix, together with appropriate risk mitigation measures.
Our aim is to build on the existing processes within the tax function to jointly develop a bespoke organisational and procedural structure that meets the defined goals. For a TCF to be effective, it not only needs to be legally compliant, but also practical and applicable to the specific context of the company in question.
Implementation
During the implementation phase, the consolidated findings and recommendations are applied in the company. These may include guidelines, checklists, workflows, or training, for example, that enable the company to transform its tax function and achieve its objectives.
Depending on the nature of the engagement, companies can choose to implement the TCF themselves or with the support of their tax advisors, like Forvis Mazars. Digital tools, like software, might be deployed to achieve specific objectives within the TCF, but the TCF itself is not a tool. It is the documented framework which, if implemented, will enable the company to achieve compliance. It also forms the basis for transparent, structured and consistent documentation for tax authorities or auditors to work with.
Discover more on how a tax control framework solution can benefit your business by visiting our dedicated TCF homepage, which has a collection of resources to support you on your tax journey.
Discover more
- Tax control framework – https://www.forvismazars.com/group/en/services/tax/tax-control-framework
- TCF in practice – https://www.forvismazars.com/group/en/services/tax/tax-control-framework/tax-control-framework-in-practice
- TCF Quick-Check – https://www.forvismazars.com/group/en/services/tax/tax-control-framework/tax-control-framework-quick-check
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