In this context, can you please explain exactly what the total tax contribution means?

The total tax contribution includes all taxes paid by a company. It covers the taxes borne that flow as expense into the company's income statement (e.g. corporate income taxes and taxes on capital) on the one hand; and the taxes collected by the company from third parties and remitted to the state (e.g. withholding tax on bank interest) on the other.

One of the main reasons for the loss of public trust has been compensation systems. Can systems geared to long-term results help restore trust?

Many companies are feeling compelled to review their remuneration systems and gear them to longer-term, more sustainable total compensation. The Swiss regulatory authority FINMA has stressed that compensation systems may not give incentives to take undue risks. Completely new models are currently under discussion. One way of creating greater sustainability is by setting up a bonus bank into which variable compensation components are paid each year depending on the achievement of objectives. This will only be paid out once a certain period has elapsed, and only in the event of sustained business performance. If, on the other hand, the results are only short term, deposits into the bonus bank have to be reduced again. Long-term remuneration models like this, which FINMA is also proposing, could certainly help restore trust.

How is it possible to communicate to the public that tax efficiency and compliance with laws and regulations are compatible?

There is no contradiction here. On the contrary, they are two sides of the same coin. Any business has a legitimate interest in keeping its tax burden as low as possible within the limits laid down by the law. Indeed, it has a duty to its shareholders and staff to do so as part of its cost management efforts. At the same time a company has to disclose the contribution it makes to public finances. Compliance with the tax rules is a fundamental and absolutely vital requirement if an organisation is to avoid unnecessary risk and damage to its reputation. Compliance is a key element of tax efficiency. While the primary requirement is compliance with material provisions, ensuring compliance with all the relevant procedural rules is also an important responsibility of a company's tax department.

Do companies now have an opportunity to make their tax function more effective?

It is very important to put a tax strategy in place, especially in the current situation. Another priority should be to review the efficacy and efficiency of tax-related structures and processes throughout the organisation. While many companies have been doing this for some time, efficiency is more important now than ever: the more effectively tax resources can be deployed, the easier it is to reduce costs without sacrificing quality. Optimum allocation of resources can also help meet the more stringent tax compliance requirements now imposed by many countries, particularly in relation to transfer pricing.

Can organisations also use this as a means of countering suspicions that they are shifting profits to low-tax countries?

Just to be clear: there is nothing wrong with allocating profits to low-tax countries if it is done correctly. However, there will always be allegations that companies are shifting profits inappropriately to low-tax countries. Increasingly we will see governments amending tax legislation to broaden the taxable base. Their main target will be internal transfer prices, and specific documentation requirements to verify transfer pricing. Companies have to prepare themselves and ensure they are properly documented. They should also restrict themselves to transactions with economic substance; artificial structures are not acceptable. It is also important for companies to have predictable tax bills: for this reason, more and more organisations are signing advance pricing agreements with tax authorities in countries in which they do cross-border business.

How can tax risks be integrated with enterprise risk management?

Every tax strategy must include effective controls for individual tax processes. A systematic enterprise-wide tax risk management system must be able to capture risk items and adjust the assessment of risks on an ongoing basis. Good corporate governance also means regular reporting on tax risks to the highest level of management. Tax risk management also has to be examined by the internal audit.

What options do companies have right now for optimising their liquidity management via tax structures?

In the current crisis, many companies have posted losses at individual group companies or on a consolidated basis. Organisations should endeavour to offset current and future earnings against existing and ongoing losses. Given the different tax jurisdictions and fiscal entities involved, this is no straightforward undertaking. It can often only be done by means of restructuring. Tax consolidation is a very important component.