Comparisons and Recommendations

For the last decade a major trend within tax administrations has been to shift from a roughly one size fits all approach—where close to all taxpayers experience a deterrence approach—to a more responsive and collaborative approach as in co-operative compliance programmes. Such programmes build on the idea that the participating corporations disclose relevant information including their tax risks and are transparent to the tax administrations and in return will tax administrations provide real-time predictability and clarity concerning taxation issues of relevance for the corporation. In brief, co-operative compliance builds on the slogan: “…certainty in exchange for transparency” (OECD 2016, 7). Co-operative compliance has increasingly become a core concern and way of organizing the relation between tax authorities and large corporate tax payers when it comes to securing tax compliance. This working paper is the result of research by Work Package 6 in EU’s Horizon 2020 funded programme FairTax that has been running for the four-year period 2015-2019. Our research in Work Package 6 addresses how proactive engagements with large corporate taxpayers have affected regulation of tax collection and administrative processes, changed relationships between stakeholders and tax administrations, and influenced tax compliance in the Nordic countries. The aim of this working paper is to provide a comparison of the experiences in four of the Nordic countries: Denmark, Finland, Norway and Sweden and to propose recommendations. The Nordic countries are considered similar and so were the co-operative compliance programmes that were implemented in each country, yet the outcomes were very different. We thus dealt with various case characteristics (Flyvbjerg 2006) where the outcomes hinged on a complexity of elements. We argue that the Swedish case is an extreme case due to its turbulent life and concomitantly with only a handful of participants that have very little activity. The Norwegian case, in contrast, is an example of a maximum variation case because of the much longer history of collaborative relationships and the outcome of the work with tax risk. The combination of a collaborative way of working and systematic risk management and monitoring may either reflect a most likely scenario of future tax administration—or perhaps the least likely. Lastly, we argue that the Danish and Finnish cases represent paradigmatic cases because both of these align largely with the standards set by the OECD and because they therefore present more ordinary or regular ways of working with co-operative compliance. Analyzing a wide variety of case characteristics means that our findings can be of general interest, beyond the Nordic countries

Co-operative compliance in taxation of large corporations in Finland : process and outcomes

This dissertation is a case study in Syvennetty asiakasyhteistyö, in the implementation of the co-operative compliance principles and the development of the initiative as a regulatory regime. Using qualitative methods, this dissertation describes and analyzes the change that has taken place in the regulation of Finnish corporate taxation. The consequential regulatory transformation, transnational influence, the underlying principles, and fairness of Syvennetty asiakasyhteistyö are researched topics in this study. This dissertation consists of an introduction and four separate essays: an essay describing and analyzing Syvennetty asiakasyhteistyö followed by three essays with different viewpoints to the initiative. In 2008 and later in 2013, the OECD proposed new recommendations to be applied in the taxation of large corporate taxpayers. These new recommendations, under the name of co-operative compliance, were aimed at replacing the earlier confrontational tax practices with new measures based e.g. on mutual trust, transparency and co-operation between the tax agency and the corporate taxpayers. In Finland, these co-operative principles were embraced in an initiative Syvennetty asiakasyhteistyö by the Finnish Large Taxpayers’ Unit (Konserniverokeskus, KOVE). The principles of co-operative compliance are expected to bring benefits to both the taxpayers and the tax administration in the form of decreased administrative burden, improved tax certainty and predictability of taxation, to name a few. The end goal of co-operative compliance is improved corporate tax compliance as a result of behavioral changes regarding tax avoidance and tax planning. This dissertation examines taxation as an organizational-societal phenomenon, where of significance are the various tax field practices and the interrelationships between the different actors and the various practices. Overall, this dissertation presents a field-level analysis of the tensions between reform ideals and practices of taxation.Tämä väitöskirja tutkii Syvennettyä asiakasyhteistyötä ja sitä, kuinka OECD:n suosittelemia uusia, yhteistyöhön perustuvia tapoja toteuttaa suuriyritysten verovalvontaa (co-operative compliance) on sovellettu Suomessa ja kuinka Syvennetty yhteistyö sääntelyjärjestelmänä on kehittynyt. Tässä tutkimuksessa käytetään laadullisia tutkimusmenetelmiä suomalaisessa yritysverotuksessa tapahtuneen muutoksen kuvaamiseksi ja analysoimiseksi. Verotuksen sääntelykentässä tapahtunut muutos, ylikansalliset vaikutteet, sääntelyn taustalla olevat periaatteet ja Syvennetyn asiakasyhteistyön oikeudenmukaisuus ovat tutkimuksen kohteena. Väitöskirja koostuu johdannosta ja neljästä erillisestä esseestä. Näistä esseistä ensimmäinen kuvailee ja analysoi Syvennettyä asiakasyhteistyötä ja kolme muuta esseetä tutkii sitä kukin omasta näkökulmastaan. Vuonna 2008 ja myöhemmin vuonna 2013 OECD antoi suosituksia uusiksi tavoiksi toteuttaa suuryritysten verovalvontaa. Näiden ”co-operative compliance” –nimellä olevien uusien suositusten tarkoituksena oli muuttaa verotuskäytäntöjä siten, että aikaisemmat, vastakkainasetteluun perustuvat käytännöt korvautuisivat uusilla käytännöillä, joiden pohjana oli verovelvollisten ja veroviranomaisten välinen yhteistyö sekä mm. molemminpuolinen luottamus ja avoimuus. Suomessa Konserniverokeskus pilotoi ja otti käyttöön nämä uudet periaatteet Syvennetty asiakasyhteistyö –toimintatavan nimellä. OECD:n suositusten tavoitteena on hyödyttää sekä verovelvollista että verohallintoa, kun muun muassa hallinnollinen taakka pienenee ja verotuksen varmuus ja ennakoitavuus paranevat. Päätavoitteena on parantaa yritysten verolainsäädännön noudattamista ja vähentää verovälttelyä. Tämä väitöskirja tutkii verotusta organisatorisena ja sosiaalisena ilmiönä, jossa merkityksellisiä ovat verotuksen kentän erilaiset toimintatavat sekä näiden toimintatapojen ja verotuksen eri toimijoiden väliset suhteet. Yleisesti ottaen, tässä väitöskirjassa esitetään analyysi jännitteistä, joita esiintyy verotuksen kentässä muutosihanteiden ja verotuksen käytäntöjen välillä

Enhanced Customer Cooperation : Experiences with cooperative compliance in Finland

This report examines the experiences with a collaborative compliance project – Enhanced Customer Cooperation (ECC) – introduced by the Finnish Tax Administration. The ECC was introduced by the Large Taxpayers’ Unit of the Finnish Tax Administration at the beginning of 2013, and it ran as a pilot until the end of 2015. Since the start of 2016, the ECC has been a part of the permanent operations of the Large Taxpayers’ Unit. Based on the interviews with tax officers, corporations participating in the ECC and tax lawyers and tax consultants, the ECC is bringing about a cultural change in the administrative practices and ways of communicating between tax authorities and taxpayers. In general, the ECC’s objective of increasing cooperation between tax administration and taxpayers has been welcomed. There were, however, some concerns about the impartiality towards taxpayers, efficiency in the use of human resources and the possible retrospective involvement of the Tax Recipients’ Legal Services Unit. In addition, because predictability was described as one of the key aspects of taxation for companies, many questions have been raised regarding whether the ECC can deliver more predictability in taxation practices.nonPeerReviewe

Nordic Experiences of Co-Operative Compliance Programmes : Comparisons and Recommendations

For the last decade a major trend within tax administrations has been to shift from a roughly one size fits all approach—where close to all taxpayers experience a deterrence approach—to a more responsive and collaborative approach as in co-operative compliance programmes. Such programmes build on the idea that the participating corporations disclose relevant information including their tax risks and are transparent to the tax administrations and in return will tax administrations provide real-time predictability and clarity concerning taxation issues of relevance for the corporation. In brief, co-operative compliance builds on the slogan: “…certainty in exchange for transparency” (OECD 2016, 7). Co-operative compliance has increasingly become a core concern and way of organizing the relation between tax authorities and large corporate tax payers when it comes to securing tax compliance. This working paper is the result of research by Work Package 6 in EU’s Horizon 2020 funded programme FairTax that has been running for the four-year period 2015-2019. Our research in Work Package 6 addresses how proactive engagements with large corporate taxpayers have affected regulation of tax collection and administrative processes, changed relationships between stakeholders and tax administrations, and influenced tax compliance in the Nordic countries. The aim of this working paper is to provide a comparison of the experiences in four of the Nordic countries: Denmark, Finland, Norway and Sweden and to propose recommendations. The Nordic countries are considered similar and so were the co-operative compliance programmes that were implemented in each country, yet the outcomes were very different. We thus dealt with various case characteristics (Flyvbjerg 2006) where the outcomes hinged on a complexity of elements. We argue that the Swedish case is an extreme case due to its turbulent life and concomitantly with only a handful of participants that have very little activity. The Norwegian case, in contrast, is an example of a maximum variation case because of the much longer history of collaborative relationships and the outcome of the work with tax risk. The combination of a collaborative way of working and systematic risk management and monitoring may either reflect a most likely scenario of future tax administration—or perhaps the least likely. Lastly, we argue that the Danish and Finnish cases represent paradigmatic cases because both of these align largely with the standards set by the OECD and because they therefore present more ordinary or regular ways of working with co-operative compliance. Analyzing a wide variety of case characteristics means that our findings can be of general interest, beyond the Nordic countries.nonPeerReviewe