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Tax Internal Control Systems

If companies fail to organize tax processes, this can lead to penalties. In the event of a breach of tax obligations, the management, executive board, and also the management of the tax department are sometimes personally liable. However, the persons involved are often not aware of this risk.

The Federal Ministry of Finance has published the application decree for Section 153 of the German Tax Code (Abgabeordnung, AO) (May 23, 2016) to assist companies and their representatives in protecting themselves against criminal consequences. Accordingly, the introduction of a tax internal control system (tax ICS), which is intended to fulfil tax obligations, can minimize liability risks for companies and their managers and guarantee protection against possible reputational risks.

By digitizing the processes, the tax ICS not only provides the preventive function described above, but also increases the efficiency of operational processes and opens up the opportunity to integrate the tax department even more strongly into corporate processes.

A prerequisite for the success of a tax ICS is a cooperative compliance approach, i.e. mutually productive and trusting partnership between the company and the financial administration to enable process and system audits and to carry out “simulated fiscal tax audits” in advance.

Benefits of Tax Internal Control Systems

Our services in the area of tax ICS/tax compliance systems are particularly relevant for you in the following situations:

  • Establishment or carve-out of a company and thus the need to set up a tax ICS
  • Weaknesses in the tax ICS that have already occurred and, in the worst case, have already led to findings in the fiscal tax audit and, possibly, to further consequences
  • No or no sufficient documentation of the tax ICS, in particular not according to the application decree for Section 153 of the German Tax Code (AO)
  • Complex mass tax transactions, the high volume of which can have a major impact even in the case of minor errors.

FAS AG Support in the Introduction of Tax Internal Control Systems

Our services in the area of tax ICS/tax compliance systems include in particular:

  • Analysis of the existing situation in the area of tax ICS to identify weak points and potential for improvement
  • Design and implementation of optimization measures for the tax compliance system, in particular the implementation of control measures to avoid tax risks
  • Documentation of the tax internal control system
  • Software selection and support in the implementation of tools for the tax ICS.

If you are interested or have any questions, please contact us.

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 Thomas Heimhuber Director