Transcript Auditing SMEs

Organisation for Economic Co-operation and Development
Large Taxpayer Units
18. Organizational Structures and Work
Arrangements including Staffing and Skills
and expertise required for Large Business
Units
Nairobi, 14 – 18 February 2011
Centre for Tax Policy and Administration
Organization of Large Business Units
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Large Business Units are headed by senior executives
and management teams including special advisors
Special advisors and members of management teams
are each responsible for specific areas such as
compliance research, international, etc.
Compliance operations of large taxpayers divisions or
units are structured on an industry segment basis
reflecting the main business activities of the economy
Major Industry Segments and Special Units
in Large Business
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Finance/Banking/Insurance
Communication Technology
Natural Resources/Oil & Gas
Retail/Pharmaceutical/Medical
Heavy Manufacturing/Transportation
Building and Construction
Shipping
Reasons for industry-focused units
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Specialisation
Building knowledge on industry specific issues
Improving commercial awareness
Understanding of industry practises and issues
Delivering a better and more focused taxpayer service
Designing, developing and implementing compliance
programs including educational activities to help
taxpayers understand industry specific tax
responsibilities
Conducting research
Special units in addition to industry units
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Performing risk analysis and intelligence gathering
Providing technical advice (by industry or by issue such
as transfer pricing, anti-tax avoidance)
Organizational arrangements for
international taxwork
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Most Tax Administrations have a dedicated unit (at
headquarters or elsewhere) responsible for international
administrative policy
In most countries this includes the responsibility for the
implementation of international tax policy and the
advance assessment on feasibility and enforceability of
new rules and regulations.
Usually countries have a dedicated unit responsible for
the competent authority function to coordinate the
exchange of information and assistance with recovery of
tax debts.
Organizational features of international tax work
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Dedicated units responsible for international administrative policy
are also responsible for the performance of the role Tax
Administrations have in the process of treaty negotiation in 50
percent of the surveyed countries.
More than fifty percent of Tax Administrations have dedicated units
for sharing information / knowledge management in the area of
international taxation.
One third of Tax Administrations in surveyed countries have a
dedicated unit responsible for providing information / account
management for potential foreign investors and or similar activities.
A large majority of the Tax Administrations have centralized the
managing of the tax affairs of large multinational taxpayers in a
dedicated organizational unit existing of one or more offices.
Work-force resources, skills, and
competencies required
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The degree and scope of the resources used in the large business
unit vary strongly from one country to another. Identifying factors
include:
The number of large taxpayers
The criteria used to identify large taxpayers
The complexity and nature of the large taxpayers
The scope of functions performed within the large business unit
The type of taxes administered
The level of audit and taxpayer service activity performed
The range of technology used.
Number of LBU staff as percentage of total staff
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The number of employees working in the large business unit as a
percentage of total staff ranges from 0.75 percent to 6.6 percent
The total number of staff is influenced by many other factors (value
of this indicator therefore limited):
Number and type of taxes administered
Other tasks of the Tax Administration
Complexity of legislation
Type of economy
Seize of the country
Population (number/type/education/age etc)
Development stage
Use of IT
Tax morale
Numbers of staff in LBU
Country
Number of staff LBU
% of total staff
Australia
891
4.0
1,366
3.4
France
800
1.0
Ireland
237
4.0
Netherlands
750
2.5
55
0.8
UK
1,694
4.5
US
6,243
6.6
Canada
Norway
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Tax Administration staff usage for international tax
work
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With a very few exceptions Tax Administrations have
concentrated all activities around their involvement in
the processes of international tax policy and legislation
and tax treaty work and exchange at Head Quarters
The numbers of staff involved are quite limited varying
from 1- 6. There is hardly any involvement of
operational staff at (local) offices in this process.
Improving the training of tax officials on international tax issues
including the secondment of officials from one administration to another
Recommendations to improve expertise in and training
on international taxation:
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Knowledge sharing
Co-operation with universities and other educational
institutions
Induction training programs
other
Knowledge sharing
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Create and strengthen the role of knowledge and coordination groups of experts in international taxation,
including the use of modern communication technology
such as intranet
Build and strengthen networks of contact persons
throughout the organization to ensure inputs from the
organization as a whole and to provide support to staff
tasked with activities that cannot be centralized
Ensure access to dedicated international documentation
systems
Initiate pilots to conduct joint audits
Co-operation with universities and other educational
institutions
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Building and strengthening relationships with
universities, business schools to encourage these
institutions to include sufficient elements of international
taxation in their study programmes
The same approach should be adopted for regulatory
bodies such as accounting and legal organizations
accountants
Induction training programmes
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Include aspects of international taxation in induction
training programmes for all officials who will likely be
involved in international tax work
Consider including officials who may infrequently be
involved in aspects of international taxation work to
ensure they have an awareness of international taxation
issues
Other recommendations on training
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Concentration of international tax work in dedicated
units at headquarters and in centralized dedicated
organizational units for the managing of the tax affairs of
large multinational taxpayers. These units need to have
a sufficient size to be effective and sustainable
Facilitate staff learning foreign languages (English) and
to participate in training programs (in foreign languages)
offered by external institutions
Improving participation in international organizations by
ensuring that the right people participate and attend
meetings and by monitoring the participation through
clear mandates and evaluation
Organisation for Economic Co-operation and Development
Large Taxpayer Units
18. Organizational Structures and Work
Arrangements of Large Business Units
The Netherlands
Nairobi, 14 – 18 February 2011
Centre for Tax Policy and Administration
Facts and Figures
• Income taxpayers
• via paper
17%
• via floppy disk
9%
• via internet
74%
• Corporate taxpayers
• VAT taxpayers
• Wage taxpayers
• Motor vehicles
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10.223.000
750.000
1. 316.000
595.000
10.944.000
Taxes and Charges collected by
DTCA (2007):
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Income / Wage tax
Corporate tax
VAT / excise duties
Import duties
Environmental tax
Motor vehicle tax
Other taxes
Social Securities
Total
Budget TCA
40
19
52
2
4
3
15
32
162
2.5
(€ bn)
Structure of the Ministry of Finance
Minister
State Secretary
Secretary-General
Directorate-General
of the Budget
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General Treasury
Directorate-General
for the Tax and Customs
Administration
Directorate-General
for Tax and Customs
Policy and Legislation
Directorate -General for the Tax and
Customs Administration (DGBel)
Internal Accountancy
unit
Innovation and
Development
International
Affairs
Enforcement
policy
Operational
Management
Private taxpayers and
procedural law
Business taxpayers
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Management Team
Personnel
Legal Affairs
Customs and
environment
Support and facilities
Cassation
Managementteam
support
Tax and Customs Administration
Special directorates
Customs
• Computer/network service’/
Software development
Privatel Taxpayers
Small/ medium
companies (North)
Small/medium
companies (South)
Large & multinational
companies
Operational divisions
• Fiscal/Economic Information
and Investigation/
• Training, knowledge and
Communication
• Facilities Services
• Process and
Product development
80 district offices
•REGISTRATION
•AUDITING
main processes
•COLLECTION
•INVESTIGATION
•SERVICE
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•ASSESSMENT
integrated
approach
Structure and role of the
Large Business Units
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The units or teams are branche-oriented
for example: industries, transportation,
trade, etc.
Advantage:
more knowledge about the target group
single desk for all tax affairs
compliance
higher quality of audits
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Structure and role of the
Large Business Units
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Each team deals with 40 - 60 entities
The units or teams are branche-oriented
The entities are registrated in the Client
information system (IKB) and the transparent
risk assesment system (ATK)
The team gives each entity the treatment
according to its tax importance and tax risks
Structure and role of the
Large Business Units
Integration on team or unit level
 Processes
assessment, collecting and auditing
 Taxes
income tax, company tax, value added tax
and wage tax
 ‘Small’ taxes, like dividend tax and capital tax
are treated by specialised groups in the tax
office
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Structure and role of the
Large Business Units
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Each entity has a account manager
He is resposible for:
a correct and actual picture of the entity
keeping the treatment plan up-to-date
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• long range treatment
• coming year treatment
• input to the team plan
• depth of treatment
• to propose audits when necessary
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Structure and role of the
Large Business Units
Personnel:
50% academical
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• managers
• legal specialists
• financial-, EDP-, statistical auditors
• account managers
• 30% middle educated employees
• the same activities, but lower
taxexposure
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• 20% administration
Each employee has a personal computer with access
to the national systems
Tasks Account Manager
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Risk management
Treatment Plan
Entity overview & monitoring progress
Internal and external Relationship
management
Company meeting
Provisional assesment
Preliminary consultation
Assessment
Tasks Tax Auditor
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Preliminary consultation
Preliminary investigations
National projects
Fraud projects
Training and education
Other
Tasks Tax Inspector
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Assessment
Assessment after audit
Appeal
Preliminary consultation
Fraud projects
National projects
Training and education
Other
Staffing
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Total number of employees in the DTCA is
30.000
Total number of employees in the LBU’s is
750, i.e. 2,5%
Staffing
Staff in LBUs:
50% academical
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• managers
• legal specialists
• financial-, EDP-, statistical auditors
• account managers
• 30% middle educated employees
• the same activities, but lower
taxexposure
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• 20% administrative support
Each employee has a personal computer with access
to the national systems
Education
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Tax Assurance Courses on the Business University
Nyenrode together with tax advisors, CEO’s and
CFO’s of VLE’s.
Collaboration with several universities for training
programs on taxes and auditing for tax-, EDPauditors, tax-inspectors etc.
Also collaboration with business schools for “training
on the job” programs
Because of the new strategic approach a strong
need of training on social skills
Masterclass training courses in negotiation and cooperation
Training on social skills
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New strategy (more cooperative,
preventive, instead of repressive)
More cooperation between the employees
(working as a team)
More cooperation with the LBU
More internal sharing of knowledge
Main focus: trust, transparancy and
understanding.
This takes a total new way of thinking.
Not only with the tax-employees, but also
with the taxpayers, and the intermediaries
(for instance KPMG, Trust Rules)
Hypegiaphobia,Trust rules
(KPMG)
1. Make contact personal
2. Define common goals
3. Set the right example
4. Built trust with sensible rules
5. Share responsibility and trust
6. Stay on course and keep calm, even when
things go wrong
7. Rely on informed trust, not on blind trust
8. Be mild onmistakes but crush abuse
9. Dear to experiment and learn from
experiences
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Knowledge Sharing
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pilots with joint audits, with tax-auditors, taxspecialist and account-managers
expert- or knowledge groups: EG Very Large
Enterprises, EG Tax/EDP/Statistical Audit/ EG
International Fiscal Affairs, etc
intervision between audit teams, LBU’s: learn from
each other, best and worst practices
a lot of experimenting, a lot of mistakes, but a lot
lessons learned.
reactions of the taxpayers are quite positive!