Compliance means conforming to a rule, such as a specification, policy, standard or law.
With taxes, the process of maintaining compliance with changing tax laws can be challenging, particularly when it comes to international organizations that do business with partners all over the world. Even the complexities involved in filing individual and corporate tax returns are on the rise, causing more people to turn to tax professionals for assistance.
Simply, tax compliance is a filing all the required returns and paying taxes on time to avoid penalties and other consequences that may cripple the operations of a business. The two facets of tax compliance are: timely filing and paying.
Tax professionals, including accountants and auditors, have deep expertise in current tax law and the best practices for tax compliance. These professionals can help businesses and individuals maintain their tax compliance even amid changing regulations and tax reform.
Regulatory compliance describes the goal that organizations aspire to achieve in their efforts to ensure that they are aware of and take steps to comply with relevant laws, policies, and regulations. Regulatory compliance outlines the goals that organizations want to achieve in their efforts to ensure that they are aware of and take steps to comply with relevant laws, policies, and regulation. Due to the increasing number of regulations and need for operational transparency, organizations are increasingly adopting the use of consolidated and harmonized sets of compliance controls. Organizations have to ensure that all necessary governance requirements can be met without the unnecessary duplication of effort and activity from resources.
The main roles of regulatory compliance are:
Identification
- Identifies possible risks that an organization may face
- Addresses the jeopardies
Prevention
- Advises on how to prevent the risk management factors
- Implements control to protect the organization from those pitfalls
Monitoring and Detection
- Observes and reports on the effectiveness of controls in the management of the organization’s risk vulnerability
Resolution
- Determines compliance issues as they enter into the picture
- Maintain the company’s input and output qualities
- Actively try to lessen financial wrongdoings
Advisory
- Advocate business on rules and regulation
- Commend what to do to prevent future loss
Note: Data retention is a part of regulatory compliance that is proving to be a challenge in many instances. The security that comes from compliance with industry regulations can seem contrary to maintaining user privacy. Data retention laws and regulations ask data owners and other service providers to retain extensive records of user activity beyond the time necessary for normal business operations. These requirements have been called into question by privacy rights advocates.