Cooperative compliance : a framework ; from enhanced relationship to co-operative compliance

110 Pages·2013·1.611 MB·English

by  OECD

Co-operative Compliance: A Framework
From EnhAnCEd rElAtionship to Co-opErAtivE CompliAnCE
Contents Co-operative Compliance:
Preface
Executive summary A Framework
Chapter 1. Introduction
Chapter 2. The current state of play
From EnhAnCEd rElAtionship to Co-opErAtivE
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isbn 978-92-64-20084-5 -:HSTCQE=WUU]YZ:
23 2013 20 1 p

Co-operative Compliance:
A Framework
FROM ENHANCED RELATIONSHIP
TO CO-OPERATIVE COMPLIANCE
This work is published on the responsibility of the Secretary-General of the OECD.The
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Pleasecitethispublicationas:
OECD(2013),Co-operativeCompliance:AFramework:FromEnhancedRelationshiptoCo-operative
Compliance,OECDPublishing.
http://dx.doi.org/10.1787/9789264200852-en
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3
FOREWORD –
Foreword
Purpose
This report has been prepared to take stock of developments in the application of the
concept of co-operative compliance and the changes that have taken place in the business
and economic environment five years on from the publication of the Forum on Tax
Administration study “Study into the Role of Tax Intermediaries”. This report addresses
past and current experiences and it is dedicated to evaluating the co-operative compliance
approach and how revenue bodies assess its contribution to the delivery of compliance
outcomes.
Background to the Forum on Tax Administration
The Forum on Tax Administration (FTA) was created by the Committee on Fiscal
Affairs in July 2002. Since then the FTA has grown to become a unique forum on tax
administration for the heads of revenue bodies and their teams. The work programme of
the Forum is overseen by a Bureau comprised of commissioners.
In 2009 participating countries developed the FTA vision setting out that
“The FTA vision is to create a forum through which tax administrators can
identify, discuss and influence relevant global trends and develop new ideas to
enhance tax administration around the world.”
This vision is underpinned by the FTA’s key aim which is to improve taxpayer
services and tax compliance – by helping revenue bodies increase the efficiency,
effectiveness and fairness of tax administration and reduce the costs of compliance.
The FTA is supported by a number of specialist sub-groups and networks, including
the Large Business Network. Twenty six countries participate in the network (Australia,
Austria, Brazil, Canada, Chile, Denmark, Finland, France, Hungary, Ireland, Italy, Japan,
the Netherlands, New Zealand, Norway, People’s Republic of China, Portugal, the
Russian Federation, Singapore, South Africa, Spain, Sweden, Switzerland,
Turkey, the United Kingdom and the United States) and it contributed extensively to
the preparation of this report.
Caveats
National revenue bodies face a varied environment within which to administer their
taxation system. Jurisdictions differ in respect of their policy and legislative environment
and their administrative practices and culture. As such, a standard approach to tax
administration may be neither practical nor desirable in a particular instance.
CO-OPERATIVE COMPLIANCE: A FRAMEWORK – FROM ENHANCED RELATIONSHIP TO CO-OPERATIVE COMPLIANCE © OECD 2013
4
– FOREWORD
The documents forming the OECD tax guidance series need to be interpreted with
this in mind. Care should always be taken when considering a country’s practices to fully
appreciate the complex factors that have shaped a particular approach.
Inquiries and further information
Inquiries concerning this study should be directed to the International Co-operation
and Tax Administration Division at the OECD Centre for Tax Policy and Administration.
CO-OPERATIVE COMPLIANCE: A FRAMEWORK – FROM ENHANCED RELATIONSHIP TO CO-OPERATIVE COMPLIANCE © OECD 2013
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TABLE OF CON TENTS –

Table of Contents
Abbreviations and acronyms .............................................................................................. 9
Preface .............................................................................................................................. 11
Executive summary ......................................................................................................... 13
Chapter 1 Introduction.................................................................................................... 15
The Enhanced Relationship concept: Origins, history and conceptual framework .......... 15
Current context .................................................................................................................. 15
Project “The Enhanced relationship 5 years on” ............................................................... 16
From “Enhanced relationship” to “co-operative compliance” .......................................... 16
Method .............................................................................................................................. 17
Notes ................................................................................................................................. 18
Bibliography .................................................................................................................... 18
Chapter 2 The current state of play .............................................................................. 19
The key pillars of the 2008 Study ..................................................................................... 19
The growing number of co-operative compliance models and their implementation ....... 21
Illustrative examples of co-operative compliance models ................................................ 24
The (common) features of co-operative compliance models ............................................ 29
Interesting and significant differences .............................................................................. 30
Expectations about benefits .............................................................................................. 34
Challenges ......................................................................................................................... 35
Principal findings of reviews or evaluations ..................................................................... 36
Notes ................................................................................................................................. 38
Bibliography .................................................................................................................... 39
Chapter 3 Co-operative compliance: Key issues .......................................................... 41
Co-operative compliance and the wider compliance strategy ........................................... 41
Co-operative compliance and equality before the law ...................................................... 45
Co-operative compliance and the spirit of the law ............................................................ 48
Managing disputes within a framework of co-operative compliance ............................... 50
Notes ................................................................................................................................. 53
Bibliography .................................................................................................................... 55
Chapter 4 The importance of the Tax Control Framework ....................................... 57
MNE guidelines-the principles of good tax governance ................................................... 57
Tax control frameworks-translating the principles into practice and reliable systems ..... 57
CO-OPERATIVE COMPLIANCE: A FRAMEWORK – FROM ENHANCED RELATIONSHIP TO CO-OPERATIVE COMPLIANCE © OECD 2013
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TABLE OF CONTENTS
Assessing the frameworks-a systems approach and how this can be used to give society
(including bodies that audit revenue bodies) assurance about the rigour of the concept
and the reliability of the outcomes .................................................................................... 59
Notes ................................................................................................................................. 63
Bibliography .................................................................................................................... 63
Chapter 5 Internal governance of co-operative compliance programmes
within revenue bodies ..................................................................................................... 65
The importance of explicit governance in providing assurance to wider society about
these programmes ............................................................................................................. 65
Some examples of governance models described ............................................................. 67
Essential issues/principles concerning governance in revenue bodies that revenue bodies
may want to take account of ............................................................................................. 70
Notes ................................................................................................................................. 71
Bibliography .................................................................................................................... 71
Chapter 6 Evaluating the value of co-operative compliance ........................................ 73
Introduction ....................................................................................................................... 73
Business case .................................................................................................................... 73
Costs and benefits for the revenue body ........................................................................... 74
Indicators for measuring effectiveness .............................................................................. 75
Qualitative benefits for revenue bodies and business ....................................................... 79
Notes ................................................................................................................................. 85
Bibliography .................................................................................................................... 85
Chapter 7 Conclusions, recommendations and next steps ........................................... 87
Key conclusions ................................................................................................................ 87
Recommendations ............................................................................................................. 88
Looking ahead ................................................................................................................... 88
Annex A Overview of websites and links to public information about
co-operative compliance ................................................................................................. 89
Annex B Summary of the report ‘Tax supervision – made to measure.
Flexible when possible, strict where necessary’ ........................................................... 92
Annex C Mindmaps features of co-operative relationships ....................................... 98
Annex D The coherence between the concepts of Internal Control and
Tax Control ...................................................................................................................... 99
Annex E Background information on Committee of Sponsoring Organisations
of the Treadway Commission (COSO) ........................................................................ 101
Notes ............................................................................................................................... 101
Annex F Overview of lessons learnt ............................................................................ 102
Countries experience: Difficulties encountered, solutions and lessons learnt ................ 102
Staff skills ....................................................................................................................... 102
Change programme: Analysis ......................................................................................... 102
Taking the first step: Trust breeds trust........................................................................... 103
CO-OPERATIVE COMPLIANCE: A FRAMEWORK – FROM ENHANCED RELATIONSHIP TO CO-OPERATIVE COMPLIANCE © OECD 2013
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TABLE OF CONTENTS –

Managing perceptions ..................................................................................................... 103
Co-operating with business: Expectations ...................................................................... 104
The role of the tax intermediary ...................................................................................... 105

Figures
Figure 2.1 Compliance Model ......................................................................................... 25
Figure 2.2 Risk Differentiation Framework ..................................................................... 25
Figure 2.3 Strategic Compliance Framework .................................................................. 27
Figure 2.4 IRAS Customer Relationship Framework ...................................................... 28
Figure 3.1 Trends of taxes (EUR billions) actually collected .......................................... 52
Figure 6.1 Tax compliance programme logic .................................................................. 77
Figure 6.2 Large Business issues – Total tax at risk in million EUR .............................. 79
Tables
Table 2.1 Co-operative compliance models ...................................................................... 22
Table 3.1 Italian dispute resolution procedures ................................................................ 52

CO-OPERATIVE COMPLIANCE: A FRAMEWORK – FROM ENHANCED RELATIONSHIP TO CO-OPERATIVE COMPLIANCE © OECD 2013