Work proactively and in cooperation - make sure that third parties are part of your trust-based strategy
The culture that should permeate the Tax Administrations should be to prioritise proactive measures. This will utilise resources efficiently and reduce financial and administrative costs for both the Tax Administration and tax payer.
Cooperation strengthens trust. The purpose of cooperation in the field of tax should be to put the tax payer in focus and, more specifically, the environment that the tax payer operates in. By working together Tax Administrations can gain valuable insights into taxpayer behaviours, the challenges they face and the concerns they may have. The Tax Administration is just one of a number of players in a taxpayer’s business environment.
Tax Administrations working closely together, with taxpayers and other stakeholders including other Government agencies, advisers, industry representative bodies, and other Tax Administrations, will strengthen trust between the parties.
Experiences from Tax Administrations across the EU show that it is valuable to have systems in place to engage with stakeholders on different tax topics. It is possible to develop ways to listen to relevant stakeholders with a view to making tax compliance easier. Tax Administrations should explore how cooperation between the public sector, private sector and intermediaries can function within its specific jurisdiction. Cooperation with other Tax Administrations can also enhance trust. It can be complicated for taxpayers to understand why different Tax Administrations differ in their approach, actions and behaviour.
When differences arise between public authorities, public trust can be affected. There should be co-operation between all relevant authorities, particularly where an issue affects another Government agency as well as the Tax Administration (e.g. overlaps between tax and social security services). To strengthen trust, it is important that the Public Sector can work as a whole, and contribute to improving citizen’s lives and this will increase confidence and trust with Tax Administrations and other Government agencies Relations with public administrations in Member State that have their own taxes (such as regions, provinces or cities) would be beneficial and collaboration should increase trust with taxpayers. If taxpayers receive similar treatment from different bodies in similar scenarios, greater tax certainty is achieved and taxpayers trust in the whole system will increase.
Building strategic relationships and working relations with key private sector stakeholders can have a positive impact on the overall tax environment. It is possible to collaborate with the private sector in the development of new procedures or tools. Early engagement regarding new legislation will increase legitimacy. These relationships can also help build a sense of fairness which will contribute to increased levels of trust.
International forums have initiated cooperative compliance programmes aimed at providing assurance that companies are being compliant. Framed as part of the trust based approach, such programmes can be a valuable tool to engage with external stakeholders. However, to achieve the sought after effect it is essential that the measures are fully transparent, both for those partaking and for other stakeholders.
Collaboration with software developers might be beneficial for some Tax Administrations. These developers can assist taxpayers to integrate their tax obligations into their existing business systems and this allows for a seamless transfer of data to the Tax Administration. Any collaboration with external bodies must have due regard to data privacy rules and confidentiality agreements should be in place to protect taxpayer information.
What applies to taxpayers also applies to intermediaries such as Tax Agents or Tax Practitioners. These intermediaries provide an important function as they assist many taxpayers with their tax compliance obligations. It is therefore essential to build good working relationships with them and this will improve taxpayer’s trust in the Tax Administration. Tax Administrations are encouraged to implement a strategy for cooperation with intermediaries.
Taxpayers are now acting in an increasingly international environment and may be interacting with a number of different Tax Administrations. In this regard, trust and cooperation between Tax Administrations in different countries is important as it will contribute to a better environment for taxpayers. Therefore, Tax Administrations should continue to explore different ways to cooperate.