The Pretax Strategy Preparation

A GOOD STARTING point in preparing for the Tax Risk Management strategy process is for the BO/CFO , together with the tax manager , to complete the following Tax Risk Management best practice checklist prepared by PricewaterhouseCoopers in their tax risk management guide.

Best Practice Tax Risk Checklist

Figure 1: Best practice checklist – Answer Yes or No

Internal Control Component  

Control environment Do you have a documented tax risk management policy?

Are there specific tax risk management objectives?

Have all relevant stakeholders had input to the policy?

Have all the tax risk areas been included?

Has the tax risk management policy been discussed and agreed at board level?

Has the policy and objectives been communicated to all stakeholders?

Is there an appetite in the business to implement the policy?

Does the board review the position at least once a year?

Is the tax risk management policy aligned with the wider objectives of the business?

Risk Assessment

Are there procedures in place to assess the tax risks in the business?

Do they cover all areas of tax risk?

Do they cover all taxes?

Do they cover all significant countries in the group?

Do you know who are the key creators of tax risk in your organization?

Do you have process in place to manage these people?

Do you know what the five key tax risks are in the business?

Do you use scenario planning to assess risk?

Are tax risks considered in aggregate to allow an overall portfolio view of risks to be considered?

Is the tax risk assessment documented?

Control Activities

Are risk control procedures in place?

Are the five key tax risks in the business being properly managed?

Is it clear to the business when they need to consult the tax function?

Is it clear when the tax function needs to consult with the board?

Are control activities communicated and embedded throughout the organization?

Is it clear who in the organization has responsibility for individual control activities?

Are the detailed control activities documented agreed at board level?

Are you properly supporting those who have a risk mitigation role (e.g., the shadow tax function)?

Information and Communication

Is the board kept aware of the key tax risks in the business?

Is the board consulted on major tax risk matters?

Is there a central place people can find out about the business’s tax risk policy?

Is there a list of people (or roles) who need to understand their role within tax risk management?

Are people new to roles within tax risk management briefed on tax risk management as it affects them?

Is the shadow tax department briefed on tax risk management?

Is there training in place to ensure key individuals understand their role in tax risk management?

Are processes in place to ensure the tax function is kept aware of operational changes to the business?

Monitoring

Is there a process in place to ensure that tax risk management control activities are operating effectively?

Are internal audit involved?

Are the results of monitoring activities reported back to senior management?

Is the monitoring process documented?

Is remedial action taken where risk assessment and control activities are not found to be operating effectively?

Source: Tax Risk Management Guide, PWC,

In accordance with Circular 230 Disclosure