Tax reporting reforms move a step closer

Tax reporting reforms move a step closer

Tax reporting reforms move a step closer 150 150 ECIIA

European regulations requiring companies to report and pay tax on their profits in the country in which they arise moved a step closer this month.

The so-called country-by-country reporting regime is meant to prevent companies aggregating their profits from across the EU and paying tax in a jurisdiction of their own choosing.

And on 12th June, the ECON and JURI Committees of the European Parliament approved the proposals with possible exemptions for commercially sensitive information. Companies may be able to apply for exemptions to authorities in member states.

Internal audit would have an important role to play in assuring that the processes involved in collating tax information were robust and fit for purpose.

Speaking last summer at a breakfast meeting jointly organised by ECIIA and FERMA to discuss the implications of the new rules, ECIIA spokesman Silvio de Girolamo, Chief Audit Executive at Italy’s Autogrill, said: “As the third line of defence in organisations, and depending on the maturity of the tax processes, internal audit may provide assurance about tax reporting, or function as an adviser.”

He said internal auditors would be able to coordinate their work with chief risk officers and tax managers to ensure controls around tax reporting were complete and effective. This would also help minimise the duplication of the effort needed to comply with the new provisions.

After approving the draft report on the country-by-country tax proposals, the committees failed to reach the qualified majority needed to enter negotiations with the European Council. The draft report will now go to Plenary.

Read more information on the new rules here.

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