The benefits of having a tax control framework

The benefits of having a tax control framework

Wed 24 Apr 2024

Tax control frameworks are becoming increasingly common as companies seek to manage their taxation, compliance, and risk management obligations more effectively and efficiently. So, what is a tax control framework, and what are the benefits? 

A tax control framework is a set of processes and internal control procedures that ensure a company’s tax risks are known and controlled, helping it to comply with reporting and compliance obligations at both the national and international level. In doing so, it protects both the company and its senior executives from the reputational, financial and legal risks of non-compliance. 

A typical tax control framework might focus on seven core areas: 

  • Culture 
  • Objectives 
  • Organisation 
  • Risk 
  • Programme 
  • Communication 
  • Monitoring and improvement 

The business’s existing processes and performance across these areas is reviewed, assessed and analysed in detail. The outcomes and insights are then used to develop a structured framework for managing all taxation relevant processes and tax matters going forwards. 

The framework defines the steps that needs to be taken and the processes that need to be implemented in relation to taxation matters across the entire company, not only in the tax or finance teams. In doing so, it minimises the risks of non-compliance and provides a clear audit trail that helps to protect the company and its executives in the event that something goes wrong. 

Benefits of a tax control framework 

Not only does a tax control framework protect the company from tax risks and help to defend both the company and its senior management against accusations of tax irregularities, it also helps to:  

  • build trust in the tax function and improve tax data 
  • increase the transparency and efficiency of tax processes 
  • strengthen cooperation and trust with tax authorities 
  • form the basis for automation and digitalisation of processes 
  • enhance the depth and accuracy of sustainability reporting 

Given these advantages, it’s not hard to see why, for many nationally and internationally oriented companies, a tax control framework is increasingly being seen as an essential tool for managing tax, mitigating risks and protecting the company. 

Discover more on how a tax control framework solution can benefit your business by visiting our dedicated TCF homepage, which has a collection of resources to support you on your tax journey.