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Tax departments come to the fore as companies wrestle with corporate governance

The pre-eminence of the CFO in the company tax department is coming under threat as CEOs begin to take a keener interest in tax affairs due to corporate governance pressures, according to a survey by Ernst & Young. Of the 354 tax directors interviewed, more than half say they are seeing more direction coming from the CEO. And, while 62% of tax directors say their CFO is still responsible for tax decisions, 31% say that final policy and procedure approval are now in the hands, not of the CFO, but of the CEO and board.

After the US corporate governance scandals of the last few years, companies are becoming increasingly aware that failure in step with corporate governance demands and regulations, particularly in regard to issues such as tax, will affect the wider reputation of the company - hence the greater CEO interest.

?Tax departments are playing a much more important, immediate and visible role as organisations wrestle with the increasing demands of corporate governance and regulatory compliance,? says Mark Weinberger, vice chairman for tax at Ernst & Young Americas. The result, he says, is greater alignment between tax risk and overall enterprise risk management.

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