2008 Ernst & Young Tax risk survey: Steady course: uncharted waters

2008 Ernst & Young Tax risk survey: Steady course: uncharted waters Managing tax risk continues to be one of the toughest challenges for tax departments around the world. 541 companies from 18 countries took part in this year’s survey, enabling EY to identify global trends in tax function priorities, time allocation and success measures.

From EY:
Tax risk is everywhere
Our third global tax risk survey finds that companies continue to face increased pressure on the tax function. As a result, tax functions are focused on addressing risks in every major area of the tax lifecycle - planning, provision, compliance and controversy. Improving the tax function is clearly more important than ever, with more than 90% of companies indicating this will be an important area for them over the next two years.

People are a tax risk
87% of respondents identified people issue as an important challenge facing the tax department. Companies are struggling to get enough people to staff their tax department. They are also challenged to train the people they have, with 77% of companies indicating that the lack of skilled resources is a contributing factor to tax risk.

The trend - proactive versus reactive
Today, companies report a significant increase in the time they’re spending identifying, managing, tracking and responding on tax risk. The number of companies who spend at least 20% of their time on tax risk increased over the last two years from 16% to 25%. leading tax functions are responding by becoming more efficient and broadening their response to risk. Building linkages to other parts of the organization is becoming increasingly important.

Communication is key
According to our findings, companies that have regular communications with their board about tax risk are also more likely to report having specific measures in place to address those risks. The difference seems to be that they take a broad approach to tax risk assessment and work to efficiently leverage their people, processes and technology.

We’ve come a long way….but there’s a long way to go
Tax departments continue to face risk, both from within the organization and the external environment. Demands from stakeholders are increasing. global economic uncertainties can be expected to continue. A comprehensive approach to tax risk management will be key to charting a steady course…in uncharted waters.

Download the “2008 Ernst & Young Tax risk survey: Steady course: uncharted waters” (pdf, 2.5mb)