Tax Risk Management Issues And Countermeasures

Early in the 20th century,80, tax risk management system has caught many concern of government and large enterprises of some developed countries. Especially after the "Enterprise Risk management-integrated Framework" which is promulgated by the COSO of USA on October 2004, many countries attached great importance to tax risk management and made in-depth study on it. After several years of development, western countries have accumulated rich experience in tax risk management practices. With a special economic system, China started late in tax management. Until the "tax violations" frequently revealed in last two years, the Chinese government, enterprises, experts and scholars began to pay much attention to tax risk.On May 2009, State Administration of Taxation promulgated the "Tax Risk Management Guidelines for Large Corporations", which is the first guidance document in China for tax risk management. Tax authorities began to pay more attention to propaganda and help corporations to establish tax risk management system. This is a big change in the concept of law enforcement. And also, it provides a favorable opportunity for tax authorities to prevent and control tax risk, enhance the level of tax risk management and ensure a sustained and healthy development without tax risk problem for key tax source enterprises. At the same time, affected by the "tax check wave", some corporations gradually became aware of the importance of tax risk management and took the pace of building tax risk management system. But there are still a lot of problems of the management system, such as limitation in the "Guidelines", weak tax risk awareness of corporations, disharmony between tax authorities and corporations, shortage of professionals, imperfect system of information transmission and communication mechanism, lack of quantitative indicators for assessment, failure for the intermediaries to play its full role, etc. And these have become important factors in building the tax risk management system. As the market economy reform is being deepened constantly and the process of global economic integration is constantly advancing. In addition the financial tax policy made adjustment after the financial crisis. China's enterprises faced more complex and international tax environment. Then the tax risk became easier to arise. So we should sum up all the forces and make further improvement of tax risk management system to enhance the core competitiveness of enterprises and effectively protect a stability tax base.Based on the theory of tax risk management, the paper analyzed the development and status of risk management in China, revealed some problems existing now. And then, learned from useful experiences of developed countries and combined national situations and the actual condition faced by enterprises, the paper put forward related suggestions to improve China's tax risk management system.Firstly, it is needed to make further improvement of the "Guidelines", including defining duties of enterprises in tax risk management, setting standards for definition large enterprises, creating opportunities for SMEs and adding more operational details. Secondly, authorities should take measures to enhance the awareness of tax risk in enterprises, especially to change the attitude of governance and management in corporation, strengthen the building of tax risk management organization, pay more attention to the value brought by preventing the tax risk and abandon the former tax concept. Thirdly, establish a good relationship between tax authorities and corporations, make more interactions between them. The tax authorities should thoroughly change the incorrect administrative concept and establish a new concept of "to help taxpayers manage tax risk is to provide the best tax services". Meanwhile, corporations should increase the tax compliance and change the attitude towards the tax authorities. Fourthly, train a large number of tax risk management personnel and take steps, such as change the status of hiring tax officer, make full account of professional background, conduct various forms of training to comprehensively improve the ability of service personnel to practice, and regularly organized business knowledge evaluation measures. Fifthly, improve the information transfer and communication mechanisms, such as creating special communication platform between tax authorities and corporations, accelerating the establishment of internal information system and communication channels in enterprise and achieving information sharing between tax authorities and tax risk management experiences between enterprises. Sixthly, compile and publish corporate tax report regularly and develop tax reporting system. And last, make the intermediary agency can give full play to its role.