A Tax Control Framework (TCF) is an internal control instrument specifically aimed at the tax function within a company and an integral component of a company’s business control framework, which is different for every organization. It is a system (process) to identify, mitigate, control and report tax risks.
The ultimate objective of a TCF is to be in compliance with tax laws and reporting requirements and manage the risks that exceed the companies' risk appetite.
A TCF should prevent tax errors, identify opportunities in a timely manner and perform correct filings at the right moment.
A company's VAT control framework system is adequate if it provides insight into where material VAT risks may arise in the company (awareness), while the degree of risk tolerance is established internally and where appropriate control measures are taken with respect to these risks.
Below video will provide further details about an effective setup of such a controls framework and the importance of aligned to the company's business framework. The pictorial overview shown first, provide the key definitions.
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