Cooperative compliance, tax control frameworks and perceived certainty about the tax position in large organisations

In recent years, a growing number of tax authorities have shifted their strategies towards largeorganisations to include forms of so-called cooperative compliance programmes (OECD,2013). These programmes require large organisations to have internal (or tax) controlframeworks in place that assure that they can comply with their tax obligations and can alsodetect uncertain tax positions and disclose these to the tax authority. In exchange, the taxauthority sees to it that tax matters are resolved quickly, quietly, fairly and with finality (OECD,2007). Cooperative compliance programmes have therefore been characterised as“transparency in exchange for certainty” (OECD, 2013, p. 28).In this paper, we discuss two studies which examine whether the need for certainty about taxmatters is indeed an important driver behind large organisations developing and implementingtax control frameworks, and whether having a tax control framework of higher quality in placeincreases perceived certainty about the tax position. Both Study I (n=669) and Study II (n=271)use data from a (web) survey of representatives of large organisations in the Netherlands. Theresults show that the need for certainty and the importance attached to tax compliance havepositive effects on the quality of an internal tax control framework. Moreover, both studies findthe quality of a tax control framework has a positive effect on perceived certainty about the taxposition. These positive associations indicate that large organisations’ need for certainty abouttheir tax positions stimulates them to improve their tax control frameworks in order to acquiresuch certainty.Social decision makin

Cooperative compliance programmes: who participates and why?

This study examines which organisations participate in cooperative compliance programmes(CCPs) and why by comparing large organisations in the Netherlands that do and do notparticipate in them. We use data from surveys conducted among representatives of largeorganisations and their Netherlands Tax and Customs Administration (NTCA) accountmanagers between 2014 and 2018 (n=394). The results show that there are few differences inorganisational characteristics between CCP participants and non-participants, but that largerorganisations are more likely to participate in CCPs. Furthermore, CCP participants have betterworking relationships with the NTCA, better Tax Control Frameworks (TCFs), and displaygreater transparency than non-participants. In addition, CCP participants report having agreater need for certainty and higher perceived certainty about their tax positions than nonparticipants.Within the group of CCP participants, we also assess whether there are differencesrelated to the intensity of contact with the NTCA and the duration of participation. We findthat the working relationship and the level of transparency are somewhat better, and thatcompliance costs for the organisation are reduced, when there is more frequent contact betweena large organisation and the NTCA. At the same time, we find a negative relationship betweenthe duration of CCP participation and the quality of the TCF. We conclude that largeorganisations may benefit from CCP participation in terms of gaining more certainty abouttheir tax position, whereas the tax authority may benefit because the organisation displaysgreater transparency. Both parties may benefit from the development of a better workingrelationship, but it appears that both parties need to continuously invest time and effort into theprogramme in order to actively maintain the cooperative relationship.Social decision makin

Cooperative compliance, tax control frameworks and perceived certainty about the tax position in large organisations

In recent years, a growing number of tax authorities have shifted their strategies towards largeorganisations to include forms of so-called cooperative compliance programmes (OECD,2013). These programmes require large organisations to have internal (or tax) controlframeworks in place that assure that they can comply with their tax obligations and can alsodetect uncertain tax positions and disclose these to the tax authority. In exchange, the taxauthority sees to it that tax matters are resolved quickly, quietly, fairly and with finality (OECD,2007). Cooperative compliance programmes have therefore been characterised as“transparency in exchange for certainty” (OECD, 2013, p. 28).In this paper, we discuss two studies which examine whether the need for certainty about taxmatters is indeed an important driver behind large organisations developing and implementingtax control frameworks, and whether having a tax control framework of higher quality in placeincreases perceived certainty about the tax position. Both Study I (n=669) and Study II (n=271)use data from a (web) survey of representatives of large organisations in the Netherlands. Theresults show that the need for certainty and the importance attached to tax compliance havepositive effects on the quality of an internal tax control framework. Moreover, both studies findthe quality of a tax control framework has a positive effect on perceived certainty about the taxposition. These positive associations indicate that large organisations’ need for certainty abouttheir tax positions stimulates them to improve their tax control frameworks in order to acquiresuch certainty.</p

Corporate tax compliance: is a change towards trust-based tax strategies justified?

Both the power of tax authorities to detect and punish non-compliance and the perceived trust in the tax authorities are generally assumed to affect tax compliance. In the present study, we build from the Slippery Slope Framework (SSF) to examine the role of trust and power in corporate tax compliance. Survey data collected among representatives of large (profit and not-for-profit) organisations in the Netherlands (n = 271) show a positive relationship between trust and tax compliance. Power appears to be negatively associated with voluntary compliance, but we find no significant relationship between power and enforced compliance. Furthermore, we find a moderating effect of power on the relationship between trust and voluntary compliance: high power appears to undermine the positive effect of trust on self-reported voluntary compliance. Results also indicate that enforced compliance is not related to self-reported tax aggressiveness, but we do observe a positive association between enforced compliance and self-reported tax minimization. This association, however, is not significant if we exclude the not-for-profit organisations from the analysis. Overall, these results can be interpreted as an encouragement for the worldwide development of trust-based regulatory activities (e.g. cooperative compliance strategies). Implications for future research are discussed.Social decision makin