Chief financial officers must have a hold of the tax function in their respective organisations as it can serve as a business enabler to create value.
Mayank Goel, Partner Indirect Tax at KPMG India, says that from the point-of-view of a CFO, visualising this involves integrating tax planning seamlessly into the broader corporate strategy.
According to Goel, CFOs can leverage taxes strategically and navigate tax policy discussions effectively through various measures.
1.     Strategic Tax Planning and Risk Management - CFOs need to view taxes beyond mere compliance. Instead, they should strategically plan to optimise tax outcomes while aligning with overall business objectives which involves analysing tax implications on various business decisions, such as expansion, mergers, acquisitions, or restructuring.
Further, CFOs must assess and manage tax risks associated with regulatory changes, international operations, transfer pricing, and tax controversies. By proactively addressing these risks, the CFOs safeguard the company's financial stability and reputation.
2.     Enhancing Cash Flow and taking efficient investment decisions – An efficient cash flow management is critical for sustaining business operations and fueling growth. CFOs can leverage tax strategies to optimise cash flow by effectively managing the tax payments, utilising available credits and taking various incentives benefits.
Further investment decision has to be strategically made to ensure minimal tax implications on the investment opportunities as tax implication significantly influence investment decisions.
3.     Be updated of all the regulatory changes and consequently advocating for favorable tax policies – CFOs should engage themselves with policymakers, industry associations and tax authorities to drive tax legislations and regulation is favorable manner. They should stay abreast of regulatory developments and assess implications of the development on the organisation.
CFOs should also constantly provide insights into the impact of tax policies on business operations for the purpose of creating a conducive tax environment.
4.     Adapting to Global Trends and stay abreast of tax developments – It is utmost necessary for CFOs to continuously adapt to ever evolving global trend such as digitalisation and cross-border trade. They should stay abreast tax developments at international level and should promote competitiveness while addressing and maintaining the emerging challenges of taxation at international level on supply chains.
5.     Embracing Transparency and Accountability and participating in tax policy disclosure - CFOs should also maintain transparency and accountability at firm level to gain public trust in the tax system in line with the Company's ESG roadmap. They should participate in public disclosure on tax policy, representing the interest of their company. By providing insights into the practical implications of tax policies influencing the business of their firm, CFOs can influence decision-makers and shape tax reform agendas
In conclusion, Goel says CFOs have a multifaceted role in leveraging taxes as a strategic business enabler and engaging with tax policy from a broader perspective.
By integrating tax planning into strategic decision-making, managing tax risks effectively, and actively participating in tax policy discussions, CFOs contribute to enhancing the overall financial health and competitiveness of their organizations.
