My 5 year old daughter asked me if I buy a mango do I pay taxes. I was surprised by the question but realized in the drive for government to raise more money in the resent past the word TAX has been the vocabulary for all young and old. Everybody wants to try and understand tax.
For company that wants to grow and make profits the understanding of tax is a must. There are so many tax heads depending on the operations of each company. For instance if 30% of company annual profits should go income tax then a company is bound to understand tax and create a tax function as an active department within the organization.
A tax function department in most cases will be involved managing tax compliance-related activities, these will include daily monitoring ot taxes, filling returns , payment of taxes, avoiding penalties.
However, the objectives for which a tax department is set up should go beyond mere compliance management. An effective tax department has evolved into a function that focuses more on adding value to various aspects of business. It includes efficient tax planning, effective tax risk management, establishing strong tax control environments, proactively engaging tax authorities and tax professionals on issues which are not so clear and may have significant impact on business decisions, etc The tax function can be built in house and strengthened with an outsourced tax services from competent tax experts.
When there is at tax query or crisis a company that had not set a good and effective tax function they might even lose millions in tax demands which could have been avoided. “My tax advisor/auditor/accountant didn’t advise me properly that’s why am in these problem “ is an old unfashionable excuse when in tax crisis. Ignorance is no defense! Any company that wants to grow exensitively must have a tax function by the way the more company grows the more taxes they pay. Every company must have a competent tax advisor.