Changing Perspective: From Enforced to Voluntary Tax Compliance
This course was delivered as part of the Tax Policy and Administration Learning Program, primarily supported by the Dutch Ministry of Finance and the Ministry of Finance of Slovenia. The overall objective of the program is to contribute to strengthening of beneficiary institutions’ capacity in implementing the EU recommendations under which the revenue authorities can deliver tax compliance risk management.
What participants learned
As set out in the EU Fiscal Blueprints, voluntary compliance is actively and continuously promoted as a part of a strategic taxpayer compliance model. It aims to ensure payment of the correct amount of tax at the right time with a minimum of administrative intervention. Given the size of the client base along with the complexity and range of taxes, social security contributions and other public receivables administered by tax authorities, critical to the concept of voluntary compliance are also new approaches to risk rating and co-operative working with taxpayers along with a tightening of controls and enforcement where the risk is perceived to be high.
This learning initiative looked into the pre-requisites for changing the perspective from enforced to voluntary compliance. In other words, how tax administrations can move from inspector-driven assessments to self-assessment systems that significantly reduce disputes with taxpayers about their tax liabilities, give a stronger sense of fairness and decrease the compliance burden on taxpayers. It also discussed possible approaches SEE tax authorities could take even with limited resources to obtain compliance in an efficient way and manage voluntary compliance through:
- Processes to identify and manage a tax risks portfolio
- Focus on easy to identify, significant and treatable risks
- Pursuit of risks using standard methodology
By addressing the underlying causes of non-compliance and striving to keep an appropriate balance of assistance, encouragement, and risk-based enforcement activities, tax authorities would be better able to perform their missions without the need to assess and calculate every taxpayer’s liability. This would allow them to gear their compliance efforts towards those taxpayers that do not comply with their tax obligations, are at risk of drifting into non-compliance or are new taxpayers and might therefore be unfamiliar with their rights and obligations.
How participants benefited
This learning initiative applied participatory learning design, combining subject matter presentations with group work activities designed to optimize learning outcomes. As such it promoted learning through engagement and personal experience while also putting special attention to leveraging on the experience and expertise of participants.
In particular by the end of the learning initiative, participants had:
- Got an overview of the practical guidelines for modern tax compliance approach set out in EU Fiscal Blueprints with a particular focus on keeping the compliance burdens for taxpayers to minimum
- Learned about the key steps to be considered when developing a risk map in order to determine whether resources are being aligned properly with the identifiable risk groupings
- Become familiar with rule-based risk model and related risk management concepts that can lead to improved voluntary compliance
- Explored potential for leveraging improved tax compliance and easing taxpayers’ compliance burden in their own contexts
- Learned by exchange of experiences from other countries
Suggested reading materials were available a few days before the start of the event and helped participants prepare for their active involvement and contributions to the successful attainment of event’s objectives.
This learning initiative was designed for mid to senior level tax officials who were involved and/or had experience with the compliance risk management, risk analysis, supervision, control and/or audit functions within their administrations.
Participants were expected to take an active part in the event’s activities. The success of the learning initiative was directly dependent on the participants’ active engagement in the discussions and group work. In view of the interactive nature of the event, it was helpful if participants had a good command of the English language as there were no interpretation services planned.
Norman Gillanders, CEF Associate Fellow
Norman was head of strategic planning and operations policy in the Irish Revenue service at the level of assistant commissioner. He led the restructuring of the Irish Revenue by designing, setting up and running the first of its new regions and was one of the key managers in the overall restructuring of the organization. He implemented a new business model for managing PAYE (employee payroll taxation) and led the development of the Irish Revenue's compliance strategy. As part of this strategy, Irish Revenue launched its REAP system for computer-driven risk screening of businesses to improve targeting of compliance interventions.
Norman worked as the IMF's tax administration reform advisor in South Eastern Europe from 2011 to 2014. He worked on behalf of the IMF with the tax authorities in Albania, Bulgaria, Croatia, Moldova, Montenegro and Romania and was attached to the Center of Excellence in Finance (CEF) in Ljubljana, Slovenia.
Enrico van den Elshout, Ministry of finance, the Netherlands
Enrico has 18 years of working experience at the Institute for Employee Insurance, where he has held various positions. In 2006 Enrico joined the National Tax and Customs Administration, where he had a large spectrum of tasks: from inspection of the administration of various companies to accompanying colleagues, selecting controls for them and reading their audit reports.
In 2013 Enrico became a national project leader for a unified approach to business start-ups and made use of the LEAN methodology. Currently he is working on developing a treatment strategy on 1.6 million "small” enterprises.
Bert van den Boorn, Ministry of finance, the Netherlands
Throughout his career, Bert has held numerous positions: he has worked as a Tax Auditor; a Team Leader Small and Medium Companies at the NTCA; a Deputy Director in one of the 13 regions of the NTCA; a Director in the Office for Foreign Tax Payers; a Trainer and Management Consultant. Apart from the above-listed, he has been a Co-Director of the Department of Objection, Complaint and Appeal and a Co-Director of the Department of Inheritance Tax and Gift Tax. Bert has as well been a City Director in Asten and Nuenen.
Bert's interest and thus, education, also reaches out to Clinical and Social Psychology and Mediation. He has work experience as a therapist in a hospital, as well as a coach and mediator.
No fee was charged for officials working in the public sector.
The costs of travel and accommodation for two participants from Armenia, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Macedonia, Moldova, Mongolia, Montenegro, Romania, and Ukraine was covered by the Dutch Ministry of Finance. Proposed candidates needed to be approved by the CEF.
Additional participants from the above mentioned 11 countries or those applying from other CEF constituency (Albania, Kosovo, Serbia, Slovenia and Turkey) had to be sponsored by other sources, e.g. their sending or sponsoring institutions.
Applicants were approved and accepted by the CEF.
This learning initiative was supported by: