Strategic tax risk management for South African farmers : an evaluation of an industry leader

Abstract

With the current heightened awareness of corporate governance, tax risk management is becoming increasingly important. This is largely on account of developments in the regulations of the Sarbanes Oxley Act, which was promulgated partly in reaction to the scandalous events surrounding corporate collapses like that of Enron (Du Plessis&Molyneux, 2007:22). The results of international surveys have shown that 80% of total tax risks are not under the control of taxation departments, and that these risks go beyond normal compliance issues (Du Plessis&Molyneux, 2007:22). Formal and effective tax risk management strategies that identify both the risks and the actions to address them are recommended (Du Plessis&Molyneux, 2007:22), and general habitual tax mistakes have been identified (Scott, Ross&Louw, 2007:16). However, little attention has been paid either to research identifying industry-specific and high-risk focus areas or to formulating what an effective tax risk management strategy should entail, one that is tailored to the specified needs of individual industries. The aim of this study is to determine what an effective tax risk management strategy for South African farmers should entail. A literature review was conducted to investigate the principles underlying effective tax risk management strategies in general. It has been deduced from the literature review that the tax risk management process forms a good framework for an effective strategy. Copyright