Abstract
M.Com. (South African & International Taxation)
Tax avoidance costs economies worldwide, including South Africa, millions of dollars. The most recent measure established to curb tax avoidance, is the introduction of tax as a corporate governance consideration. King IV obliges governing bodies to design and implement tax policies that are responsible, transparent and compliant, but does not provide guidance on the understanding or formulation thereof. It is imperative for organisations operating in South Africa to understand tax as a corporate governance consideration as JSE listed companies are required to report on the extent to which they comply with the prevailing King Report. Furthermore, failure to adhere to generally accepted corporate governance principles may in certain instances invoke legal liability. The purpose of this study is to assist organisations in the design and implementation of a responsible, transparent and compliant tax policy by: Acquiring an understanding of responsibility, transparency and compliance in relation to tax. This was achieved through a literature review which included explaining and simplifying these terms as defined King IV; and subsequently applying definitions and concepts found in OECD and UN documentation, academic articles, articles published by experts from leading audit and law firms and online tax forums, to confer meaning to responsibility, transparency and compliance within the realm of tax. Determining elements which organisations may include within its tax policy to demonstrate responsibility, transparency and compliance. These elements were identified using a content analysis method which involved collecting and analysing relevant data. This data, together with the definitions previously outlined, were used to make inferences regarding elements that demonstrate responsibility, transparency and compliance. An organisation which incorporates tax as part of its corporate governance essentially undertakes to act with a duty of care, ethically and compliantly in relation to taxes; such organisation is highly unlikely to engage in harmful tax practices. The introduction of tax as a corporate governance consideration therefore effectively serves to curb tax avoidance.