The last decade has witnessed regulatory transformations that have redefined the significance of fiscal governance in business decision-making and strategies. In Spain, the change has been palpable: we have progressed from a scenario where tax matters seldom extended to governance bodies, to another where organizations, supported by their boards of directors, are forging robust systems of tax risk management and control.
This shift in mindset commenced with the Law 31/2014, dated December 3rd, which introduced new obligations concerning tax compliance for listed companies. These changes not only involved boards of directors in shaping tax strategies, but also in reviewing and endorsing high-tax-risk investments or strategic operations.
UNE 19602 certification
The UNE 19602 certification has become an essential tool that governance bodies are advocating to ensure the implementation of robust tax compliance systems.
The same law also prompted these entities to establish tax risk management and control systems, contributing to reducing potential liabilities of management bodies and mitigating criminal liability in tax offenses.
From then until the present date, the landscape has continued to evolve, compelling large organizations in Spain (regardless of whether they are listed or not) to adopt a more tax compliance-focused approach. These approaches encompass everything from managing reputational risk and safeguarding corporate image to sustainability, a vital aspect in today’s context. Additionally, reporting mechanisms have expanded, accompanied by national and international initiatives promoting tax transparency.
About the growing need to disclose tax information in reports.
This approach is also reflected in the growing need to disclose tax information in management reports and corporate governance sections. An example is the “GRI 207: Tax” standard, introduced in 2019 by the Global Sustainability Standards Board (GSSB), which offers guidelines for preparing tax reports.
Awareness of fiscal governance has solidified within governance and leadership bodies, fostering the implementation of periodic reporting procedures for tax information reviewed by the tax compliance unit, senior management, and boards of directors.
These efforts enable the review and approval of fiscally significant operations, as well as the assessment of the effectiveness of tax risk management and control systems. Moreover, the annual publication of reviewed tax matters by both audit committees and boards of directors has become increasingly commonplace.
In February 2019, the UNE 19602 Standard – Tax Compliance Management Systems was introduced. This standard sets requirements and guidelines for adopting, implementing, maintaining, and enhancing tax compliance policy and other elements of a tax compliance management system.
Certification under this standard has become a valuable tool that governance bodies are promoting to ensure the implementation of robust tax compliance systems within their organizations. This certification reinforces companies’ commitment to good governance in the tax domain, validating the maturity of their tax compliance systems.
Fiscal governance has emerged as a new business paradigm in the past decade.
As organizations strengthen their focus on tax compliance and commit to transparency and good governance, the collaborative and transparent relationship between Tax Authorities and taxpayers becomes more crucial than ever. A future where companies with solid tax risk management and control systems are valued and rewarded seems promising, aligning corporate interests with overall fiscal and economic well-being.
If you would like to know how we at Luptax can assist you in achieving these tax compliance agreements, do not hesitate to contact our representatives. We are here to help.
Source, March 2023 Note: https://www.expansion.com/fiscal/2023/03/22/6419fe28468aebbc438b468a.html