Is your company paying too much tax?
The Strategic Tax Review is a simple way to take stock of your company's tax situation
With new compliance requirements , evolving tax laws, and even new court interpretations, it's a challenge for companies to keep up in today's business environment. As a tax director's list of responsibilities grows, it becomes increasingly difficult to keep track of all the changes and to match them with the ever-changing business operations. The Strategic Tax Review provides a comprehensive review of tax opportunities that may have been created by such changes.
In today's fast-paced business world, it should come as no surprise that many tax directors and CFOs are overburdened. In addition to compliance, reporting, budgeting and forecasting, corporate executives with tax responsibilities must stay abreast of evolving national and international tax laws, court decisions and even administrative guidelines from different levels of tax authorities. Keeping up with these changing tax requirements can be even more difficult for companies that experience a lot of turnover, lack internal resources, or are involved in many mergers, acquisitions or restructurings.
Given this broad-based scope, tax planning often gets relegated to the back burner — a situation that may lead to a disconnect between a company's tax and business strategies. As a result, many CFOs and finance departments are eager for a way to independently validate their corporate tax position to ensure they are appropriately managing their tax rates, considering emerging tax strategies, and paying no more tax than is strictly necessary. Simply put, companies are looking for strategies that will allow them to achieve their business goals in the most tax-efficient manner possible.
An efficient process for uncovering tax savings
"A Strategic Tax Review is a process where we review an organization's tax situation to identify strategies that can maximize their after-tax results," explains Michelle Chan, a tax partner based in Calgary. The methodology is applicable to every business, no matter the industry or size. Deloitte has conducted Strategic Tax Reviews for oil and gas companies, high-tech firms, financial institutions, real estate companies and manufacturers. "Our aim is to conduct a very incisive and efficient review to uncover both historical and progressive tax savings — all while making the most judicious use of a company's internal resources and precious time," says Chan.
|"Our aim is to conduct a very incisive and efficient review to uncover both historical and progressive tax savings — all while making the most judicious use of a company's internal resources and precious time."|
— Michelle Chan, Tax Partner
To deliver the goods in the most structured way possible, Deloitte brings together both industry specialists and experienced tax practitioners when preparing to conduct a Strategic Tax Review. This team then examines the financial data and historical filings related to a company's specific goals. Brief interviews are also planned to increase our knowledge of current and planned business operations. The Strategic Tax Review process is flexible, and can be as wide-ranging or as focused as a company requires.
For example, the scope of a Strategic Tax Review can include income measurement, global tax structuring, provincial income taxes, customs and commodity taxes, mergers and acquisitions, and/or corporate structuring. It can examine loss utilization, identify underutilized tax credits, or assist with capital tax planning and employee benefits. It can also be customized to focus on a specific business concern — such as cost minimization, profitability or tax risk exposure.
"Our Strategic Tax Review methodology sets out an expedited process that lets us bring our knowledge to bear in a non-intrusive manner," says Brian Brophy, a tax partner in St. John's, Newfoundland. "By working in a coordinated fashion and bringing together the best people from both a tax and industry knowledge perspective, we can easily share resources across the country to devise the most appropriate solutions for all companies — regardless of their size."
A way to reduce tax liabilities
For many organizations, the primary goal of any tax review is the identification of targeted strategies that align with their current business structure. These are the types of customized solutions the Strategic Tax Review is designed to deliver.
"Consider the case of a multinational that is very focused on cost containment and working to make each unit profitable," notes Tan Ong, a tax partner in Montreal. "In one such case, we looked at strategies that helped the company recover credits against tax payable, saving them $5 million immediately, and $3 million prospectively," says Ong. "That's a significant saving for any company."
Brophy agrees. "One company I worked with wanted to accelerate its loss utilization on some significant loss carry-forwards. Working with them, we identified strategies to use up their existing losses and then continue to minimize provincial taxes after the losses were used up," recalls Brophy. "By identifying strategies that could be applied to future tax filings, we helped the company secure long-term tax savings — almost like an annuity."
If you're interested in identifying strategies that can help you recover taxes paid or reduce future taxes payable, or would simply like a third-party review of your tax strategies, a Strategic Tax Review may be right for you.