Companies in Canada and around the world are grappling with a new and significantly tougher corporate tax environment driven by a combination of investor protection regulation and increased requirements to document and provide information.
This conclusion comes in two KPMG surveys, which together covered 753 tax professionals across 19 countries. The surveys sought to identify where tax departments are experiencing the most difficulties in fulfilling their duties, and how they plan to adapt to meet new challenges.
Forty senior Canadian tax personnel were among those interviewed worldwide and the results showed that large Canadian multinational companies are feeling more pressure than many of their peers in other countries.
The majority of the Canadian tax directors surveyed experienced these pressures in the previous 12 months:
- Increased documentation requirements;
- Demand for higher level of accuracy;
- Increased work as a result of regulator requirements;
- Increased level of internal review;
- Time compression in the financial reporting calendar;
- Increased requirements for auditor independence; and
- Increased level of work for quarterly corporate income tax calculations.
The majority of U.S. tax directors surveyed also experienced similar pressures.
The global survey determined that Canadian tax departments are under the most pressure of the 18 countries surveyed, except for Hong Kong. In response to these demands, the most popular options among Canadian tax directors were to increase training, enhance technology capabilities and increase their use of outside consulting.
“These issues are important for senior management,” said Bruce Flexman, Canadian Managing Partner for Tax at KPMG Canada. “Tax is one of the biggest costs for most businesses and it’s getting a higher risk profile due to more complex regulation.”
The report concludes that boards and audit committees still need to spend more time on tax matters, but much of the necessary improvement may have to come from better communication by tax departments themselves of the risks they control and the value that they can add.