Transcript Auditing SMEs

Organisation for Economic Co-operation and Development
Large Taxpayers Units
8.General overview of the international
practises for the Management of Large
Business
Nairobi, 14 – 18 February 2011
Centre for Tax Policy and Administration
FTA Compliance Management of Large Business Task group
Experiences and Practices of Eight OECD Countries
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Criteria to identify large businesses vary from country to
country as one or more measures are used such as
turnover, assets, tax paid, specific industry, and other
special factors (e.g., international dealings).
The characteristics of large taxpayers are generally very
similar in all participating countries, which describe them
as being complex in their structure, having multiple
operating entities with international business dealings,
and are responsible for a high portion of tax revenue.
International practices
Industry segmentation
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All tax administrations structured the compliance
operations of their large taxpayers division or unit on an
industry segment, which for a number reflected the main
business activities of their economy.
In addition to being organized along certain industry
lines, some tax administrations have special units to
perform risk analysis and intelligence gathering, provide
technical advice, and to monitor and evaluate
performance.
International practices(2)
Risk Management
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Tax Administrations are using risk management
extensively to manage and prioritise their casework.
The level of risk analysis and response vary from one
country to another due to the different experience with
compliance issues and the degree of non-compliance
by large taxpayers.
Compliance issues may vary from one country to
another. However, all participating countries cite tax
compliance issues related to international transactions
and international business structures as major areas of
concern and focus.
International practices(3)
Enhancing relationship
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A focus on building a better relationship between the tax
administration and the large taxpayers is a common
approach across countries.
There is an increase in compliance activity through nontraditional approaches. The trend is to move from postfiling of tax return examination to “real-time” evaluation
of risk and compliance issue resolution.
A number of countries have instituted various programs
to provide certainty to the large taxpayers and early
identification and resolution of compliance issues.
International practices(4)
Corporate Governance
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Corporate governance principles and practices are
gaining more attention and focus by certain tax
administrations as a number of them believe that the
responsibility of a company’s tax policy should be at
Board level since tax is an important financial element.
Corporate governance principles instituted in some
countries are affecting large taxpayers’ behaviour and
there are indications that tax administrations are using
the corporate governance principles to improve tax
compliance.
International practices(5)
Training of staff
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All participating countries have programs to develop,
train and maintain a highly qualified workforce.
In most countries tax policy is not the responsibility of
the Tax Administration, but Tax Administration play an
active role in providing input and feedback on tax policy
to ensure that the tax administration’s needs are taken
into consideration.
International practices(6)
Use of technology
Technology is used to:
 improve the quality of service to large taxpayers
 to manage compliance, including the capability to
identify risk early
 to increase efficiency in operating the large business
unit. (by developing programs to collect additional data
in a timely fashion to enhance compliance risk
assessment, making resource decisions and ensuring
consistent treatment of large taxpayers operating in
certain business segments).
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What criteria are used in your country to identify Large Business
What percentage of your taxpayers do qualify as Large Business.
What percentage of tax revenue do they represent
What do you consider to be the main characteristics of Large
Business Tax payers in your country
How are the compliance operations of the Large Taxpayers Units
organised
Does your Tax Administration use Risk Management techniques in
its operations of the Large Taxpayers. Explain your answer.
What are other (specific) characteristics of the management of
Large Business Taxpayers
How do you train your LTU staff?