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Russo, Ronald --- "Risk Management in Taxation" [2010] ELECD 580; in van Daelen, Marijn; Van der Elst, Christoph (eds), "Risk Management and Corporate Governance" (Edward Elgar Publishing, 2010)

Book Title: Risk Management and Corporate Governance

Editor(s): van Daelen, Marijn; Van der Elst, Christoph

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803953

Section: Chapter 5

Section Title: Risk Management in Taxation

Author(s): Russo, Ronald

Number of pages: 28

Extract:

5. Risk management in taxation
Ronald Russo

5.1 HISTORICAL DEVELOPMENT

For a company, taxes in principle constitute costs. Costs are generally
to be minimized, within the limitations of the relevant laws. This also
applies to taxes. The relevant tax laws define the obligations of the tax-
payers: generally this entails administrative obligations and the actual
payment of taxes due. Governments regard taxation, amongst other
things, as a principal source of finance for the public sector, whereby
every company has to pay its fair share of the total tax burden. Tax laws
are the means by which governments practically implement the shift of
funds from private companies to the public domain. Taxation is a major
factor in determining the net result of a company. As will be described
below, it is not always easy to determine the exact amount of taxes due
in the commercial accounts of a company. The risk that the amounts
are not correct and the management of this risk will be discussed in this
chapter.
The oldest taxes are generally considered to be custom duties and some
forms of indirect taxes1 levied from producers or importers of goods.
These taxes were treated as part of the cost price and in this way the public
paid their taxes without exactly knowing how much as they were hidden
in the price of the product. Apart from the obscurity of the amount of tax
actually paid, taxes on consumption were also felt not to evenly spread the
tax burden, ...