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Tax ManagementMaturity Model
A universal tool to determine the qualityof the tax function and theframework
Tax ManagementMaturity Model
A universal tool to determine the qualityof the tax function and the tax control
‘Being demonstrably in control isactually not that complex.’
In 2005, PwC introduced its tax assurance practise in The Netherlands, with the tax controlframework (TCF) concept as its central theme. We have brought about a fundamentally differentapproach to the practice of tax supervision and management. We think it is essential that notonly the tax department must be assured of the quality of tax control but also the otherstakeholders in and outside the organisation.
Tax Management Maturity Model
There is a major need for clear frameworks and standards fortax. This is why PwC and Nyenrode University have developedthe Tax Management Maturity Model. This is an (international)tool for determining the quality of the tax function and the TCF.
The model is based on accepted models such as COSO andCobiT. It uses five maturity levels to show the extent to which an
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CobiT. It uses five maturity levels to show the extent to which anorganisation exercises tax control and what the ambition level ofthe organisation is or should be.
It is a universal, transparent model that shows in one sheet thecompliance status of the entire organisation – a unique tool forself-diagnosis and communication with (international)supervisors and all internal and external stakeholders.
The model is ideal for (international) benchmarking, scopingand developing a tax control environment.
In its basic form, the model consists of four stages, as shown onthe right.
‘Being demonstrably in control isactually not that complex.’
In 2005, PwC introduced its tax assurance practise in The Netherlands, with the tax controlframework (TCF) concept as its central theme. We have brought about a fundamentally differentapproach to the practice of tax supervision and management. We think it is essential that notonly the tax department must be assured of the quality of tax control but also the other
Laag 2
The Tax Management Maturity Model consists of the followingstages:
stage 1: transparent overall view in 6 main groups (1A4!)
stage 2: detailed view of components and main groups
stage 3: objective view through detailed maturity level selection
stage 4: evidence and degree of assurance
Laag 1
Laag 3
Laag 4
2
Features of the Tax Management Maturity Model:
The extent to which an organisation is in control of its tax function becomes transparent, verifiable, uniform and comparable It is a universal, transparent dashboard that shows the compliance status in one sheet. The model comprises an ambition level and the growth path towards the designed maturity level. It is a unique tool for communicating with (international) stakeholders. The model is ideal for (international) benchmarking and agreements on tailor The model is based on internationally accepted models such as COSO and Taxation does not exist in a vacuum, so the model enforces an integral vision and organisation The model provides an objective view of the degree to which an organisation is in control of its tax function.
Tax MRI scan:
The model allows you to work in small steps(project-based) on an MRI scan of taxmanagement.
It is recommended to repeat the scanregularly as organisations constantly evolve.This creates a closed cycle of inventory andanalysis, underlying evidence, the overall
Add assurance
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analysis, underlying evidence, the overallstatus of the current situation, working onthe ambition level and increasing assurance.
It is a dynamic model focusing on diagnosiswith underlying evidence. To reach the finalconclusion - the degree of control -professional judgement is needed.
Liaising with external control specialists andauditors can add assurance that theorganisation is in control (tax assurance).
Establish ambition
Features of the Tax Management Maturity Model:
The extent to which an organisation is in control of its tax function becomes transparent, verifiable, uniform and comparable.It is a universal, transparent dashboard that shows the compliance status in one sheet.The model comprises an ambition level and the growth path towards the designed maturity level.It is a unique tool for communicating with (international) stakeholders.The model is ideal for (international) benchmarking and agreements on tailor-made supervision (enhanced relationships etc.)The model is based on internationally accepted models such as COSO and CobiT.Taxation does not exist in a vacuum, so the model enforces an integral vision and organisation-wide approach.The model provides an objective view of the degree to which an organisation is in control of its tax function.
Inventory and analysis
assurance
3
Linking evidence
Overall status of current situation
ambition level
Simplicity and detail…
The tax management situation should be clear at a single glance. In order to provide detail, themodel consists of four levels. The first level shows the current (or desired) situation. The secondlevel provides more detail on the current situation. Level three comprises objective descriptionsagainst which the organisation can compare itself (internal benchmarking). The fourth levelprovides evidence. A simple application is available for testing.
Stage 1: the overview
This level comprises of six main ‘drivers’ linked to fivematurity levels:
1. Business (& Tax) Environment;2. Business Operations;3. Tax Operations;4. (Tax) Risk Management;5. Monitoring and testing; and
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5. Monitoring and testing; and6. (Tax) Assurance.
Stage 2: detailed view
Points for attention are displayed for each main driver (stage1). In the second stage, these drivers are shown in more detailin sub-categories.
We show here an example of the Business (& Tax)Environment driver. This main driver is divided into sub-categories. The application allows you to assign a maturitylevel to each sub-category.
Optionally, you can also indicate whether there is assurance(‘assurance’ column).
Simplicity and detail…
The tax management situation should be clear at a single glance. In order to provide detail, themodel consists of four levels. The first level shows the current (or desired) situation. The secondlevel provides more detail on the current situation. Level three comprises objective descriptionsagainst which the organisation can compare itself (internal benchmarking). The fourth levelprovides evidence. A simple application is available for testing.
4
Objectivity and evidence…
For the model to succeed as a tool for gauging the quality of tax function internationally, it willhave to be used as objectively as possible. For this reason, every subis checked against objective descriptions in the third stage in order to establish the degree ofmaturity.
Stage 3: objective frameworks
For each sub-category, there are objective descriptions ofthe maturity level that applies.
The description that applies the most can be selectedwith a simple click. This choice will be shownautomatically in stage 2.
Evidence and reasons will be given for the finalconclusion and added to the category concerned.
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conclusion and added to the category concerned.
Stage 4: the evidence
The fourth stage is no more than a portal for accessingexisting evidence. This is evidence for substantiatingmaturity levels and the degree of control. In fact, it is afiling cabinet containing the separate documents or linksto the location of the evidence.
In brief: not a prelude to yet more administrative workbut a simple portal to all the relevant evidence. A bigadvantage of this is that linking evidence has actuallybecome tool and ICT-independent.
Objectivity and evidence…
For the model to succeed as a tool for gauging the quality of tax function internationally, it willhave to be used as objectively as possible. For this reason, every sub-category in the second stageis checked against objective descriptions in the third stage in order to establish the degree of
5
Level 1Initial
Level 2Repeatable
BT
E
Business (& Tax) Environment• Business strategy• Tax strategy• Tax awareness• Soft controls
BO
Business Operations• Business processes• IT (including
information/Communication)• Transfer Pricing• Data gathering
Tax Operations• Structure• Tax planning
Example: Scan of current
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TO • Tax planning
• Tax Accounting• Tax compliance
TR
M
(Tax) Risk Management• Objective setting• Event identification• Risk assessment• Risk response and control activities• Top Tax Risk & opportunities
MT
Monitoring/Testing• Internal• External• Reporting
TA
(Tax) Assurance• Internal• External• Reporting• Tax authority supervision
Level 2Repeatable
Level 3Defined
Level 4Managed
Level 5Optimized
current situation
6
Example: Ambition level
Level 1Initial
Level 2Repeatable
BT
E
Business (& Tax) Environment• Business strategy• Tax strategy• Tax awareness• Soft controls
BO
Business Operations•Business processes• IT (includinginformation/Communication)
•Transfer Pricing•Data gathering
Tax Operations•Structure
Project plan step 1
Project plan step 2
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TO
•Structure•Tax planning•Tax Accounting•Tax compliance
TR
M
(Tax) Risk Management•Objective setting•Event identification•Risk assessment•Risk response and control activities•Top Tax Risk & opportunities
MT
Monitoring/Testing• Internal•External•Reporting
TA
(Tax) Assurance• Internal•External•Reporting•Tax authority supervision
Project plan step 3
Project plan step 4
Project plan step 5
Project plan step 6
level
Level 2Repeatable
Level 3Defined
Level 4Managed
Level 5Optimized
Project plan step 1
Project plan step 2
7
8
Project plan step 3
Project plan step 4
Project plan step 5
Project plan step 6
Not rocket science, but certainly expertise
It seems a simple matter to calculate an overall score based on the maturity levels of the varioussub-categories. However, this does not reflect the complex reality. Translating the detailed scoresinto overall scores is a step that requires expertise in all of the relevant fields.
We’ll be happy to share that expertise with you!
Angela [email protected]
+31 (0)88 792 39 98/ +31 (0)6 4891 2424
Eelco van der [email protected]
+31 (0)88 792 51 38/ +31 (0)6 4622 4544
Jurriaan [email protected]
At PwC in the Netherlands, more than 4,500 people work together at 12 branches covering three distinct areas: Assurance, TaxWe provide sector-specific services and seek out innovative solutions, not just for national and international companies but als‘PwC’ is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCILglobal PwC network. Every member firm in the network is a separate legal entity acting on its own account and responsibilitymember firm. PwCIL itself does not provide services for clients. PwCIL is not responsible or liable for the actions or omissions of any of its member firms, cannot exercise authorityover their professional judgement and cannot bind them in any way.© 2011 PricewaterhouseCoopers Compliance Services B.V.(KvK 51414406). All rights reserved.
Frans [email protected]
+31 (0)88 792 14 62/ +31 (0)6 1393 4587
Roy Kramer
Not rocket science, but certainly expertise
It seems a simple matter to calculate an overall score based on the maturity levels of the variouscategories. However, this does not reflect the complex reality. Translating the detailed scores
into overall scores is a step that requires expertise in all of the relevant fields.
John [email protected]
+31 (0)88 792 75 70 / +31 (0)6 2261 5129
Jurriaan [email protected]
+31 (0)88 792 50 86 / +31 (0)6 2241 0028
At PwC in the Netherlands, more than 4,500 people work together at 12 branches covering three distinct areas: Assurance, Tax & HRS and Advisory.specific services and seek out innovative solutions, not just for national and international companies but also for government and social organisations.
PwCIL) trade and provide services. Together, these member firms constitute theglobal PwC network. Every member firm in the network is a separate legal entity acting on its own account and responsibility and not as a representative of PwCIL or any other
is not responsible or liable for the actions or omissions of any of its member firms, cannot exercise authority
+31 (0)6 4790 8286
