Article

Governance & Policy

Tax governance as a worldwide trend

Due to a focus on tax base erosion in recent years and exacerbated by the extraordinary spending by governments pursuant to COVID-19, it can be expected that tax authorities will step up tax collection efforts in terms of tax audit frequency and may impose stricter requirements relating to tax processes. A sound Tax Governance Framework (TGF) can support tax functions in terms of overall tax risk management, and a well-defined Tax Control System (TCS) can help to guide and prioritise tax relevant tasks. In doing so, the TCS can help to allocate the tax oversight responsibilities and tax data management, thereby minimising mistakes or errors and hence mitigating penalties.

In order to set good grounds for tax governance, it is key to have a better understanding of the company’s tax process landscape. Deloitte can help evaluate your organisation’s tax processes and perform appropriate analysis to identify potential gaps using Deloitte’s eight-step “Global Process Approach”. Deloitte's "Global Process Approach" is already being used worldwide. Areas of application are mostly record-to-report processes involved in tax declaration obligations for all kind of taxes.

The Inland Revenue Authority of Singapore (IRAS) co-operative tax compliance initiatives

IRAS has introduced two new voluntary compliance initiatives, namely TGF and the Tax Risk Management Control Framework for Corporate Income Tax (CTRM). Such initiatives encourage companies to demonstrate good tax governance. The main objective of TGF is to help companies maintain and improve their overarching tax governance and control framework, and bringing attention of it to the board level. 

Meanwhile, the CTRM aims to allow companies to perform a complete review of their controls and tax risk management for corporate income tax (CIT) matters. Whilst an initial CTRM project requires much more effort and resources than TGF, IRAS will grant more benefits associated with successful applications such as penalty waivers and a step down of tax audit activities. 

Overview of the IRAS tax governance initiatives

With the new TGF initiative, IRAS has aligned with international trends for tax transparency and reporting, for example, in relation to the standards issued by the Global Reporting Initiative organisation and the corresponding Disclosures 207-1, 2, and 3 focusing on good tax governance. Additionally, the CTRM offers companies a chance to formally review their corporate tax process in exchange for penalty waivers for errors discovered and stepped down audits. This initiative should become increasingly relevant as tax reporting processes will need to be updated over time due to global tax law changes and technological trends.

Therefore, it is crucial for companies to act early with the adoption of the TGF and/or CTRM initiative while improving their tax processes to prepare for the future. 

Opinion piece

Tax governance in the age of digitalisation

Fiscal sustainability remains high on the agenda of global economies. The COVID-19 induced recession has caused unprecedented budget deficits in many countries as they implemented policies to protect workers and businesses. Singapore is no exception. In fact, to recover the COVID-19 spending, the United Kingdom has just announced an increase in the corporation tax rate from 19% to 25% with effect from April 2023, for companies with profits exceeding £250,000. Find out more about tax governance and co-operative tax compliance through this opinion piece by our Tax Policy leader Daniel Ho, Tax Management Consulting Partner Piyus Vallabh, and Singapore Tax Director Andreas Kirsch.


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