Business Tax Environment anno 2015:
Improved and Reinvented! While in the past a call to your tax advisor was only required close to the tax return deadline or when confronted with a tax audit, the current business environment demands having your advisor on speed dial. TEXT VIVIAN L.M. BONIFACIO-PIETERS MSC, TAX MANAGER AT MEIJBURG & CO CARIBBEAN. JEANISE J. JOB MSC, TAX MANAGER AT MEIJBURG & CO CARIBBEAN. LAETITIA J.V. WALL MSC, TAX CONSULTANT AT MEIJBURG & CO CARIBBEAN
The current tax environment has evolved from accepting a one line explanation on your tax expense to requiring an in-depth analysis to account for your tax position. Stakeholders of financial statements (i.e. shareholders, investors and tax authorities) increasingly demand greater transparency and insight into the tax position of a company. As a result, more attention is paid to the standards of information, presentation, and disclosures to be presented in financial statements. Furthermore, the tax environment of a company is shifting from being an incident-driven approach to a process-oriented approach, gaining insights into tax risks and the risk control measures to be taken (the tax function of a company). Therefore, a thorough review of, amongst
others, the company’s accounting of income taxes (Tax Accounting) can provide comprehensive insight into its tax function, and, based on the information obtained, the performance (efficiency and effectiveness) of the tax function can be measured. The performance of the tax function is often referred to as Tax Performance and the management of the risks and responsibilities of the tax function can be referred to as Tax Performance Management.
Tax Performance Management: where are we and where do we want to be? Tax performance management is the process of design, implementation and execution of an efficient and effective tax function through which the company: • A nalyzes the current and desired level of implementation of its tax strategy, tax compliance and tax risk appetite; • Identifies the current risks in the internal processes and tax compliance as well as the tax value adding processes within the business framework; • Implements the necessary infrastructure and controls to achieve the goals as laid out in the tax strategy; and • Continuously evaluates and reviews the implemented processes to assess the efficiency and effectiveness of the tax function.
The changing business tax environment requires a new approach and interpretation of your tax position. No longer is the emphasis solely on your tax expense and tax return, but rather on the management of your overall tax performance.
Tax accounting: the presentation of the tax position in the financial statements Internal and external auditors rely on tax experts to provide and/or assess the tax position of a company in order to accurately reflect the tax position in financial statements. The most important information to be presented in the financial statements with regard to income taxes is tax expense. Tax expense comprises current tax and (movements in) deferred tax. Current tax is the amount of income tax payable (recoverable) with respect to the taxable profit (loss) in the current period and prior periods to the extent that it has not yet been settled. On the other hand, deferred tax arises from current transactions that have future tax consequences due to temporary differences arising from different accounting methods for the accounting and taxable profit, tax losses carry forward, and tax credits.
CURAÇAO BUSINESS
| NUMBER 1 | 2016
19
