59% of respondents find that the growing complexity of the tax environment is the primary source of tax risk.

63% believe that engaging with tax administrations in cooperative tax compliance programs would be a great solution to navigate through said complexity and reduce induced tax risks.

Tax is still perceived as a matter for experts, mainly discussed internally within the tax or finance function.

There is an increasing awareness from respondents on the necessity to develop tax governance and control frameworks to adapt to the growing complexity of taxation and to meet sustainability expectations.

The current limited maturity of the tax governance and control frameworks of respondents in Luxembourg may be an important source of tax risk, requiring further development in order to become sustainable.

• The maturity of the oversight and governance is basic or developing for 73% of respondents.
• 81% of respondents have basic or developing processes.
• The available resources and their organization, including the employment and management of skilled people, was the most developed of the five pillars forming tax governance frameworks in Luxembourg, with 32% of respondents marking this area as mature or even advanced.
• The development of tax data and technology is limited.

While 95% of respondents expect to communicate publicly complex and highly technical tax data, only 46% expect to go beyond requirements to provide explanations.

From a “nice to have”, such tax communication is quickly becoming an obligation in 2021 and beyond. Therefore, it will be key in building a narrative to clearly explain tax data and to educate stakeholders in light of the high reputational risk involved.