0% found this document useful (0 votes)
4 views4 pagesUnderstanding Fiscal Risk Management
The document defines tax risk and its internal and external sources for a company. It explains that managing tax risk is difficult because the probability of a tax audit is unknown. The company can reduce the risk by determining, evaluating, and adapting its tax risk management policy.
Translated by
ScribdTranslationsCopyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
4 views4 pagesUnderstanding Fiscal Risk Management
The document defines tax risk and its internal and external sources for a company. It explains that managing tax risk is difficult because the probability of a tax audit is unknown. The company can reduce the risk by determining, evaluating, and adapting its tax risk management policy.
Translated by
ScribdTranslationsCopyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
1) Definition of fiscal risk
The general notion of fiscal risk actually encompasses two meanings:
the first, classic, corresponds to non-compliance, voluntary or
no, tax rules,
while the second relates more to ignorance
from a favorable disposition that can generate a loss of earnings
important. It thus conjugates a risk of sanction to a risk of loss
of opportunity.
Fiscal risk naturally originates from the complexity of
rules that are sometimes even unstable but of course also
in the way the company approaches them within the framework of its
fiscal policy
2) The sources of fiscal risks
The sources of tax risks for a company are multiple.
They can have internal sources just as they can have
internal sources. Generally, external origin risks are
aggravated by internal weaknesses.
a-External origin risks:
Scarcity of competent human resources;
Change of doctrines or administrative practices;
Legislative or regulatory change
Complexity, ambiguity, inadequacy, and uncertainty of texts
fiscal
Emergence of new tax case law;
Misinterpretation of the company's practice by
the administration;
Practices of the sector not suited to management needs
scale ;
Fiscal controllers lacking technical qualifications
necessary;
Inconcilable discord between accounting and taxation;
Difficulty in providing compelling justification for certain expenses;
Pressure from clients or suppliers or other parties
consequences for non-compliance with tax provisions;
b-Internal origin risks:
Incompetence or insufficiency of human resources of
the administrative environment;
Unqualified or negligent practices
Lack of knowledge of the rules, texts, doctrine or of
case law
Lack of awareness of the benefits
Defective procedures;
Lack of self-control
Poor coordination between the services involved by the
taxation
Irregular, incoherent, non-conclusive accounting or
insufficient, accounting not kept up to date
Lack of confidentiality and discretion of personnel
3) The management of fiscal risk
Tax risk management claims that the company manages to
determine the nature of the sanctions incurred. But this is difficult, because the
the tax sanction scale is linked on one hand to the existence of a tax control and
On the other hand, the compatibility between fiscal choices and policy
adopted by the company.
Tax risk is difficult to pinpoint and delicate to assess. Since the
the probability of a tax audit revealing the risk is unknown, and therefore
the probability of detecting the irregularity during the tax audit is
also unknown. Because this irregularity leads to sanctions that
corresponding to the assessment of tax organizations on the
company behavior.
But the company can anticipate the fiscal administration, if the service
finance and management are on the same page and share the same
visions. It is indeed possible to manage tax risks using
four tools following:
Determine and assess the risk: each decision, each
function, every aspect of the business must be examined under
the angle of fiscal risks;
Reducing risks: that is the role of management by implementing
mechanisms of control in order to reduce, limit risks and
also to report the possible occurrence of any risks;
Ensure continuous execution: by appointing responsible parties
risks tasked with overseeing the improvement of the strategy, the
processes and measures within the framework of risk management;
Adapt a tax risk policy and strategy:
Management must inform its employees to adhere to the procedures.
in terms of fiscal risk and thus set the threshold of significant risk
of the company.
The management of fiscal risk must be established in such a way that
the company pays the minimum of taxes but in full compliance. Far
to be an attempt at fraud or tax evasion, it is sound management
and qualified as a fiscal skill.
According to Maurice COZIAN1The now of fiscal management
business is done at two levels: the elementary level and the level
superior. The first encompasses the basic technical rules, such as the
to know and apply them by a good executor. The second is not isolated.
mais relié au droit des affaires et droit comptable, remonte aux grands
principles. By this, we achieve fiscal management, which allows for
calculated boldness, with a constant concern for the limits not to be crossed2. »
1 Maurice CAZIAN, former professor and emeritus of tax law.
2 Maurice CAZIAN, the fundamental principles of corporate taxation, Lexis Nexis Edition, Paris,
1999, p 103.