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KPMG Global Study Shows Tax Management Can Boost Corporate Value

"A KPMG International study of trends in tax management, The Governance of Tax, argues that over-cautious boards may risk losing value to competitors who look at tax as a source of competitive advantage.

According to KPMG International, leading tax-oriented organizations should mention clearly in a defendable position on how tax and risk are managed; should maintain well-documented, board approved tax strategies; should construct an enterprise resource planning system for providing useful tax information and maintain transparency (read tax information) with internal as well as external stakeholders. 

The study finds that boards of directors are suffering from creeping conservatism in tax matters. The reaction is an effect of requests from regulators and investors who demand more and better information on tax policy and been held responsible for increasing pressure as the directors fight to seek balance against the need to find ways of creating shareholder value.

Loughlin Hickey, the head of KPMG s global tax practice, stated,""In the two years since we published Tax in the Boardroom , our first global discussion paper on the subject, tax has generally found its way on to the board agenda, but for many it has since moved down the list of priorities. This new discussion paper concludes that tax may often be regarded as too complex and too time consuming for directors to deal with, and that the uncertainties created by the attention of so many different stakeholders increase the complexity. This can discourage directors from fully exploring their options when deciding how tax should be managed. The number of companies that actively acknowledge the strategic significance of tax remains relatively low, but those that do tend to use tax to create value, perhaps in the form of a business driven piece of tax planning, a well executed disposal, or stealing a march on competitors by anticipating compliance developments."" "

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