Index IntroductionTax-related reputational risk Tax-related operational risk Tax-related legislative riskLaw enforcement riskConclusionIntroductionAn organization's tax landscape continues to change, especially given the increasingly interconnected world and digitized. Therefore, tax policies may not keep pace with increasing globalization and business developments, creating various tax risks for an organization. It is important for an organization to prevent, manage and resolve disputes to protect itself from today's increased tax risks. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay Reputational Risk Related to Taxes Reputational risk related to taxes emerges from an organization's actions if they are open to the public. Thanks to digital advancement, information about an organization can be distributed to the public in seconds, especially in the case of complicated tax arrangements. This can happen via the Internet or through 24-hour news coverage where “complex issues” can be “brutally summarized.” This can severely damage a company's reputation even before it has the opportunity to clarify its position. Therefore, public opinion is powerful regardless of whether it is based on inaccurate information. According to Deloitte 2018, the most important drivers of reputational risks were related to “ethics and integrity… safety, products and services”. Companies are held accountable for the actions of intermediaries, suppliers and other comparable associates, so the risk of third-party relationships is emerging quickly. This makes it clear that reputational risk is a “by-product” or an inevitable secondary result of another business risk. Therefore, to prevent this critical issue, “Understanding the interconnectivity of reputational risk is essential.” To manage tax-related reputational risk in an interconnected and digitalized world, your organization can control the level of interest the public has in its tax profile. This involves carefully monitoring media coverage of their organization and may include monitoring social networking channels that may not have been as important to their tax function. The company should also monitor legislative developments to recognize the possibility of new tax reporting requirements and obligations. An example includes BEPS Action 12 which “Requires taxpayers to disclose their aggressive tax planning arrangements.” Another measure to prevent regulatory risk is to ensure that internal stakeholders communicate well with external stakeholders where they communicate effectively about organization tax. policies and profile. The tax function must have a desire to approach risk managers, public affairs, the board of directors, etc. internally. This is done with the aim of ensuring agreement on the impact of reputational risk. Since media channels focus primarily on tax aspects when reporting on a company, companies will need to be prepared to provide constructive feedback if requested. Tax-Related Operational RiskRisks that arise within an organization from technology, people, and processes are referred to as operational tax risk. The types of associated tax risks will differ depending on the type of operations a business conducts. This risk involves heavy reliance on data from foreign jurisdictions, much of which can only be provided byfinancial personnel using various software packages. As the world becomes increasingly interconnected, the globalization of trade increases causing a taxable presence in the country in which they operate. To prevent and maintain tax-related operational risk, the organization will need to ensure that its technology, people and processes work, function and are efficient. above all, improve effectively. They will need to have an effective framework for their digital tax administration, communications and internal tax control alongside strong tax governance. An organization's business risk must be aligned with its risk tolerance and fiscal policies. Furthermore, to meet growing demands for transparency, policy statements need to be reviewed, for example by country-by-country reporting. To successfully manage operational tax risk, detailed, tax-aware data is vital. Your organization can improve the quality of its data by creating a data management strategy that is effective. For example, support the tax lifecycle using a tax technology framework. Additionally, companies can improve performance management to ensure data quality and integrity. This can be done by revising financial and tax role descriptions to explicitly include accountability. Additionally, as the world is globally interconnected, it is important for companies to create global roles. Organizations can ensure transparency and accountability within their individual functions by organizing globally. This minimizes fiscal operational risk by improving the relationship objectives between taxation and finance. To successfully prevent operational risk, companies should have a clear strategy for their tax technology that helps the organization enhance its technology infrastructure and investments. Companies can recruit people into regional and global roles who will be able to work effectively with other business functions and have the ability to work together with external, public and private stakeholders. Tax Legislative Risk Legislation or regulations imposed by the government can significantly change an organization's business prospects, this potential risk is known as legislative risk. For a business in an interconnected world, a change in legislation could dissuade it from performing well. An example would be the government imposing taxes on an industry which could discourage investors. As the world becomes more globally interconnected, governments will need to ensure that the current business model is reflected in global tax practices. This has a direct impact on the organization as direct changes are made to tax legislation. The OECD, for example, is “reforming international tax rules”. The way multinationals are taxed would be changed through this new regime. Thanks to the widespread media, information about a company's tax operations can be easily obtained by the public and the government. For example, although tax avoidance is legal and compliant with the law, in the eyes of the public it could be seen as abusive with a negative impact on the company's reputation. This could lead the government to implement stricter tax legislation. If an organization fails to comply with these legislations, it can lead to financial losses that pose a serious threat to the well-being of the organization. To prevent legislative tax risk, an organization can take a comprehensive approach and implement a framework that includes management of.