Lately, we have been hearing a lot about Tax Compliance, and it is not for nothing. Tax Compliance is extremely important to the companies, and we will help you to understand why. In the first place, let’s take a look over the implications of this term.
The verb “to comply” means act according to an order, obey, agree. Compliance, derived from this verb, means the action of complying. Applying this to the reality, Tax Compliance means acting according to tax rules and laws. The main purpose of this practice is the mitigation of risks in the fiscal area of companies.
But why is it so important? Remains the question.
Well, every business has to deal with taxes, making payments according the authorities’ requests, submitting them informations through different formularies, and a lot of other things, according to whats is legal in the city, state or country. At the same time, these organizations also have to deal with its own requirements and procedures, which combined demands a huge effort of the entrepreneurs.
The situation gets more serious due the tendency that tax rules have to change frequently. Most of the time, it is almost impossible to keep up with all the alterations, and it represents even higher risks for the company – once it can be hurted by mistakes beyond what is possible to predict.
That is when Tax Compliance shows itself vital for the companies, being able to manage all these questions.
This practice comes to support the business, presenting better and easier ways to comply with all the tax obligations. Through Tax Compliance is also possible to discover improvement opportunities, which is essential for every business.
In Brazil, for example, Tax Compliance is a urgent demand. Companies struggle to fulfill tax requirements, and that is a real exhaustant work. The country lives a true tax war, where federal, counties and states’ entities fight over contradictory and complex laws that only turn the usual bureaucracy into something even more cruel to businessmen.
Brazilians’ entrepreneurs are then finding Tax Compliance as their best ally.
In a global scenario, as we mentioned before, the search for this practice has been growing. It is possible to affirm that, today, not having a compliant company is a very stain on reputation. The damages of refusing Tax Compliance has effects even in the international business – who would like to be partner of a non-compliant organization?
Now that you have comprehended the relevance of Tax Compliance, it is time to know a little bit more about how does exactly it works.
Although its tremendous importance, it is not that simple to implement a system of Tax Compliance in a company. Imagine that you are cleaning up a house that has been messed since forever. Wouldn’t it be hard? That is the same problem in the most of companies. Regulate all the wrong procedures is an arduous job.
Accomplishing an exemplary level of Tax Compliance will take a lot of effort. First, is necessary to evaluate every single aspect of the company, then design the best strategies to correct all them, and, after this, is need to develop a tool, or scheme, to assure they going to be compliant.
It is important to emphasize that Tax Compliance it is not a generic solution which can be applied with no modifications to all organizations. It is a solution that performs differently according to the companies – that are different and have unique demands and issues.
However, there are a few guidelines for implement this activity. Commitment is the basic pillar of this process. Without it, there is no way to accomplish compliance. The employees, the managers, administrators, everyone has to be committed with the same goal: improve the performance of the business. It is essential to be aware that the improvement will be a continuum. Achieving compliance does not happen overnight. It is a long process with gradual results that get better slowly.