Where negligence occurs in a company’s organisation of tax processes, this could lead to penalties. If tax obligations are breached, the management board, executive board and the management of the tax department are held – sometimes even personally – liable. The people involved are, however, often unaware of this risk.
With the publication of the application order to Section 153 of the German Fiscal Code (Abgabeordnung, AO) (23/05/2016), the German Federal Ministry of Finance assists companies and their representatives in protecting themselves from legal consequences. Accordingly, the introduction of a Tax Internal Control Framework (Tax ICF), which serves to fulfil tax obligations, can minimise liability risks for companies and their management and provide protection against possible reputation risks.
By digitising processes, in addition to the described preventative functions, the Tax ICF also ensures increased efficiency of business processes and provides the opportunity to better integrate the tax department in company processes.
A prerequisite for a Tax ICF to succeed is a Cooperative Compliance approach, i.e. a cooperative and trusting working relationship between the company and the tax authorities that allows processes and systems to be tested and “simulated tax audits” to be performed in advance.
WTS supports you in all steps of the requirement analysis, design, implementation, and continuous development of your tax internal control framework, as well as in communications with the relevant tax authorities.