Handbook on Tax Administration

1190 Pages·2015·9.038 MB·English

by  Matthijs Alink, Victor Kommer

Handbook on Tax Administration
Second Revised Edition
Matthijs Alink
and
Victor van Kommer
IBFD
Visitors’ address:
Rietlandpark 301
1019 DW Amsterdam
The Netherlands
Postal address:
P.O. Box 20237
1000 HE Amsterdam
The Netherlands
Telephone: [phone]
Fax: [phone]
www.ibfd.org
© 2015 IBFD
All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without the written prior
permission of the publisher. Applications for permission to reproduce all or
part of this publication should be directed to: [email protected].
Disclaimer
This publication has been carefully compiled by IBFD and/or its author, but
no representation is made or warranty given (either express or implied) as to
the completeness or accuracy of the information it contains. IBFD and/or the
author are not liable for the information in this publication or any decision or
consequence based on the use of it. IBFD and/or the author will not be liable
for any direct or consequential damages arising from the use of the
information contained in this publication. However, IBFD will be liable for
damages that are the result of an intentional act (opzet) or gross negligence
(grove schuld) on IBFD’s part. In no event shall IBFD’s total liability exceed
the price of the ordered product. The information contained in this
publication is not intended to be an advice on any particular matter. No
subscriber or other reader should act on the basis of any matter contained in
this publication without considering appropriate professional advice.
Where photocopying of parts of this publication is permitted under article
16B of the 1912 Copyright Act jo. the Decree of 20 June 1974, Stb. 351,
as amended by the Decree of 23 August 1985, Stb. 471, and article 17 of
the 1912 Copyright Act, legally due fees must be paid to Stichting
Reprorecht (P.O. Box 882, 1180 AW Amstelveen). Where the use of parts
of this publication for the purpose of anthologies, readers and other
compilations (article 16 of the 1912 Copyright Act) is concerned, one
should address the publisher.
ISBN 978-90-8722-340-3 (print)
ISBN 978-90-8722-339-7 (eBook)
NUR 826
Justification
Tax Administrations implement and enforce tax laws. These laws are
designed to achieve domestic goals and are drafted in a domestic context and
from a domestic perspective. Tax laws are primarily aimed at taxing domestic
subjects and objects to raise revenue for domestic public expenditures.
Taxpayers, however, increasingly operate internationally. As a consequence,
taxation has evolved into a global issue. Tax Administrations should
therefore cooperate to increase the effectiveness and efficiency of their
approaches and operations.
Tax Administrations need to collaborate with each other both on a bilateral
basis and through international organizations. Good cooperation requires trust
and understanding based on knowledge about the legislation, the stages of
social and economic development of the country and its culture, the strategic
objectives and the procedures and methods of the other party. Tax
Administrations can also learn from each other. Although all Tax
Administrations operate in different contexts, characterized by the specific
features of the countries in which they operate, they all face similar
challenges in achieving their goals. Therefore, active participation in
international organizations on tax administration can be very beneficial.
This Handbook has evolved over time. Its initial version, Handbook for Tax
Administrations, Organizational Structure and Management of Tax
Administrations, was published in 2000. It was the result of intensive
collaboration between tax managers and tax policymakers from Latin, Central
and North America and Europe, representing various CIAT member
countries. This collaboration was initiated by CIAT inviting the Netherlands
to lead two different working groups – one on “organizational structure of tax
administrations” and another on “management of tax administrations” – and
to write a Handbook for Tax Administrations based on the input provided by
the members of these working groups. The then Director-General of the
Dutch Tax and Customs Administration, Joop van Lunteren, was delighted to
accept the invitation and assigned the responsibility for this project to us. The
initial publication has been widely used by tax administrators, both in CIAT
member countries and in non-member countries all over the world, as well as
by universities for academic purposes.
When presenting the Handbook in 2000, Joop van Lunteren stressed the
uniqueness of the product in the sense that it reflected a first attempt to
provide a systematic description of the structure and management of Tax
Administrations, based on the input and experiences of participants stemming
from such different societies in terms of tradition, culture, economy and
taxation.
In our justification of the initial version of the Handbook, we clearly stated
that – given the many differences in traditions and cultures, sizes and
populations of countries, economic and social factors, legislations and
institutional factors – the book does not aim to provide a blueprint or a best
practice of tax administration. No general blueprint or best practice of tax
administration exists. What works well in one country can totally fail in
another country, and what is feasible in one country is not in another, because
the circumstances may be too different or the preconditions are not met.
However, Tax Administrations do have much in common and they can learn
a lot from each other – both from the successes and from the failures of
others. Therefore, exchanging views and experiences on policies and
practices in the area of tax administration can be very beneficial for tax
administrators and policymakers. This book aims to contribute to that by
providing a broad and comprehensive overview of tax administration,
illustrated by numerous examples and descriptions of different approaches.
For the publication of the Handbook on Tax Administration in 2011 we
reviewed the initial version of the book entirely, after consulting a working
group hosted by Argentina consisting of users of the book from Tax
Administrations in a number of CIAT member countries and in close
collaboration with the staff of the CIAT executive secretariat. Based on the
responses of the working group and the CIAT executive secretariat and other
input, we have significantly expanded the content of the Handbook by adding
a chapter on tax policy, principles of taxation and the history of taxation, by
extending the description of compliance behaviour of taxpayers and
compliance risk management (including the specific characteristics of
different categories of taxpayers), by describing the primary processes of tax
administration and issues such as integrity and ethics in much more detail,
and by many other adjustments. As a result, the size of the book has more
than doubled and its scope has widened from a Handbook on Organizational
Structure and Management of Tax Administration into a Handbook on Tax
Administration, covering the entire tax administration spectrum.
The Handbook on Tax Administration 2011 was very well received and has
been used in many countries. The book was translated into Chinese by SAT,
the Chinese Tax Administration, which added a third language to the English
and Spanish versions. Because of the success of the book our publisher,
IBFD, invited us to provide a new updated and revised edition of the book,
which we are very happy to present. This new edition of the Handbook on
Tax Administration provides more details on a variety of topics, including
effectiveness of taxation and tax expenditures, tax competition and BEPS,
globalization, e-commerce, trends in inequality of income and wealth
(HNWIs), social media, research on compliance behaviour, corporate
governance and tax avoidance, integration of social security contributions,
and the roles and responsibilities of ombudsmen and national audit offices.
The section on audit provides more information on audit theory,
understanding of businesses, third-party information, case selection for audit,
whistle-blowers, Internet search tools, identity theft and tax fraud, money
laundering and FATF, but also the shift from traditional audit to real-time
management and self-control. The section on HRM provides more
introductions on this topic and the section on cultural dimensions of
management was updated and extended. Lastly, a new chapter is included
that provides a diagnostic tool for Tax Administrations to assess and measure
their institutional, strategic and operational ability to implement, administer
and enforce the tax laws and other tasks assigned to them.
We are very grateful to a number of people who contributed significantly to
this publication. First of all our colleagues at the Ministry of Finance, the
Dutch Tax and Customs Administration, the OECD and IBFD and also the
numerous country experts and participants and students we have worked with
in many events on tax policy and administration. It is hard to express how
much we learned from all these people. We are also grateful to the Executive
Secretary of CIAT, Marcio Verdi, and his staff for their valuable
contributions and support to the earlier versions of the book.
A special thanks goes to Kasia Bronzewska and Cora Cheung from IBFD
who put a lot of effort in delivering information to complete tables and
figures and to adjust contents to the book, and who worked intensively on
references and registers. We are also grateful for the valuable contributions
and proposals for improvements made by IBFD’s linguistic editor, Richard
Casna, the dedicated final format editing by Floor Koole and the guidance
from IBFD’s publisher, Jane Kerr.
Lastly, we would like to thank the successive Directors-General of the Dutch
Tax and Customs Administration, Joop van Lunteren, Jenny Thunnissen and
Peter Veld, for their confidence and ongoing support.
Although many people have significantly contributed to this book, the
responsibility for the content of the book rests entirely with us; any mistakes
are ours.
Matthijs Alink and Victor van Kommer
Castricum and Amersfoort, November 2015
Foreword Peter Veld
This Handbook on Tax Administration offers broad information and guidance
in the areas of tax and administration. It has a history of more than 15 years.
The first edition was titled Handbook for Tax Administrations,
Organizational Structure and Management of Tax Administrations, which
was produced in close cooperation with CIAT. When it was published in
2000, this book was characterized as a pioneering work in the field of
organizational structure and management of Tax Administrations. At that
time, very little had been published on tax administration issues and in
particular on organizational structures and management of Tax
Administrations.
The number of publications on tax and tax administration has increased
significantly since 2000. Globalization and developments in information
technology, changing demographics and norms and values in societies have
heavily influenced the circumstances wherein Tax Administrations operate,
requiring them to design and adopt new strategies.
To address these challenges the book had been reviewed entirely for its
publication in 2011. The authors, Matthijs Alink and Victor van Kommer,
had chosen to broaden their approach significantly to produce a Handbook on
Tax Administration covering many areas of tax administration in more detail
than in the first edition. As a result, the book had more than doubled in size.
The 2011 edition was well received by the international tax community and
the publisher has decided to bring out a new updated and revised edition of
the book. For this 2015 edition the authors have again broadened the scope of
the book by extending the information provided on policies and practices of
non-CIAT countries. Trends and developments such as globalization and
shifts of power, inequalities in income and wealth, the role of social media
and e-commerce and their relevance for Tax Administrations are described in
more detail, and also more attention is given to real-time management and
self-control, corporate governance and avoidance, tax competition and BEPS,
new insights on compliance behaviour and on cultural dimensions of
management. In addition, certain sectors on tax operations (audit and other
primary processes) are described in more detail. Lastly, a new chapter has
been added introducing a “Diagnostic Tool for Tax Administrations”,
enabling them to access and measure their institutional, strategic and
operational ability to implement, administer and enforce the (tax) laws and
other tasks assigned to them.
The responsibility for the content of the book rests entirely with the authors.
I trust that also this updated and revised version of the Handbook will be
beneficial for many readers.
Peter Veld
Director-General of the Netherlands Tax and Customs Administration