1. Horizontal Monitoring
Theo Poolen
Deputy Director-General
Dutch Tax and Customs Administration (DTCA)‏
January 2009
SII April 2008 1

2. Contents Developing the idea of horizontal monitoring
Key elements of horizontal monitoring
Large businesses: compliance agreements and
Tax Control Framework
Small businesses: optimizing the tax value chain
SII April 2008 2

3. Towards a new approach Changes in society and culture
Input from business community - no trust business-tax administration - backlog
International developments corporate governance
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4. Horizontal monitoring key values
mutual trust, understanding and transparency
‘disclose’ current tax risks
providing certainty in advance
no surprises
less frequent and less detailed audits
a 'commercial' service level as to
timeliness
single point of contact
understanding the business
quick response
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5. Segments
1,500 LB
11,000 MSB’s
1,200,000 small
businesses 5

6. Compliance agreements
Pilot 40 large businesses
Commitment on the highest level (Board to Board)
Agreement on manner and intensity of monitoring
All taxes and tax collection
Within boundaries law/policy/jurisprudence
No additional rights / obligations
Individual agreements; no blueprint 6

7. Core characteristics of a compliance agreement
LB submits significant tax risks real time to the tax administration
LB submits facts and its view on tax consequences
No obligation to submit internal/external tax advice
Tax administration in return provides view on the tax consequences expediently
Tailormade approach
Solution for pending tax issues in past years 7

8. Change in culture/behaviour
Problem-solving attitude
Being able to build and maintain relations
Empathic and listening capacities
Decision making capacities
Knowledge on meta-communication
Mutual trust
Continuous dialogue, also on the process and the behaviour of parties involved (including: agree to disagree) 8

9. Evaluation first part of pilot
Advantages (LB and TA): - working on actual issues - reduction of uncertainties - expedient dealing with issues
Advantages TA: - faster internal processes - involvement of management - improved communication with LB 9

10. Tax Control framework Importance of organizing trust - trustworthiness
Letter of 9 June, 2006 State Secretary of Finance to the Dutch Parliament:
“I emphasize that compliance agreements will be concluded with companies that have an adequate tax control framework’’ 10

11. in control statement (SOX)
SAS70 (TPM)
Peeling the onion
Audit annual accounts
SOX-audit
Tax audit
External audit
Tax Assurance
Internal audit
in control statement (SOX)
Business
process
Tax audit
Internal control
Other techniques
COSO 11

12. Our work changes transactions Work will primarily be aimed at the TCF
Business cycles
Business cycles
transactions
Work will primarily be aimed at the TCF
BCF/TCF
Testing the TCF
Audit tolerance
Tax issues (‘risks’)
Discussion in
advance
Tax returns 12

13. Horizontal monitoring small businesses
Solving compliance issues in advance with trade and industry organizations
Promoting the use of trusted administrative software
Tax intermediaries
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14. Horizontal monitoring tax intermediaries
Building quality by aligning work processes
Trusting the internal quality system
Statement by individual clients
Green lane for tax returns
Monitoring on “meta” level
Creating a learning circle
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15. Optimizing the tax value chain
Large Businesses: compliance agreements
Small businesses: - trade and industry organizations - intermediairies
Private Taxpayers: pre-filled tax return
Customs: Authorised Economic Operator
horizontal monitoring
Tax payer
Tax
intermediaries
Tax
administration
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16. thank you for your attention