Nairobi, 14 – 18 February 2011

1. Large Taxpayer Units18. Organizational Structures and Work Arrangements including Staffing and Skills and expertise required for Large Business Units Nairobi, 14 – 18 February 2011

2. Organization of Large Business Units • Large Business Units are headed by senior executives and management teams including special advisors • Special advisors and members of management teams are each responsible for specific areas such as compliance research, international, etc. • Compliance operations of large taxpayers divisions or units are structured on an industry segment basis reflecting the main business activities of the economy

3. Major Industry Segments and Special Units in Large Business • Finance/Banking/Insurance • Communication Technology • Natural Resources/Oil & Gas • Retail/Pharmaceutical/Medical • Heavy Manufacturing/Transportation • Building and Construction • Shipping

4. Reasons for industry-focused units • Specialisation • Building knowledge on industry specific issues • Improving commercial awareness • Understanding of industry practises and issues • Delivering a better and more focused taxpayer service • Designing, developing and implementing compliance programs including educational activities to help taxpayers understand industry specific tax responsibilities • Conducting research

5. Special units in addition to industry units • Performing risk analysis and intelligence gathering • Providing technical advice (by industry or by issue such as transfer pricing, anti-tax avoidance)

6. Organizational arrangements for international taxwork • Most Tax Administrations have a dedicated unit (at headquarters or elsewhere) responsible for international administrative policy • In most countries this includes the responsibility for the implementation of international tax policy and the advance assessment on feasibility and enforceability of new rules and regulations. • Usually countries have a dedicated unit responsible for the competent authority function to coordinate the exchange of information and assistance with recovery of tax debts.

7. Organizational features of international tax work • Dedicated units responsible for international administrative policy are also responsible for the performance of the role Tax Administrations have in the process of treaty negotiation in 50 percent of the surveyed countries. • More than fifty percent of Tax Administrations have dedicated units for sharing information / knowledge management in the area of international taxation. • One third of Tax Administrations in surveyed countries have a dedicated unit responsible for providing information / account management for potential foreign investors and or similar activities. • A large majority of the Tax Administrations have centralized the managing of the tax affairs of large multinational taxpayers in a dedicated organizational unit existing of one or more offices.

8. Work-force resources, skills, and competencies required The degree and scope of the resources used in the large business unit vary strongly from one country to another. Identifying factors include: • The number of large taxpayers • The criteria used to identify large taxpayers • The complexity and nature of the large taxpayers • The scope of functions performed within the large business unit • The type of taxes administered • The level of audit and taxpayer service activity performed • The range of technology used.

9. Number of LBU staff as percentage of total staff • The number of employees working in the large business unit as a percentage of total staff ranges from 0.75 percent to 6.6 percent The total number of staff is influenced by many other factors (value of this indicator therefore limited): • Number and type of taxes administered • Other tasks of the Tax Administration • Complexity of legislation • Type of economy • Seize of the country • Population (number/type/education/age etc) • Development stage • Use of IT • Tax morale

10. Numbers of staff in LBU

11. Tax Administration staff usage for international tax work • With a very few exceptions Tax Administrations have concentrated all activities around their involvement in the processes of international tax policy and legislation and tax treaty work and exchange at Head Quarters • The numbers of staff involved are quite limited varying from 1- 6. There is hardly any involvement of operational staff at (local) offices in this process.

12. Improving the training of tax officials on international tax issues including the secondment of officials from one administration to another Recommendations to improve expertise in and training on international taxation: • Knowledge sharing • Co-operation with universities and other educational institutions • Induction training programs • other

13. Knowledge sharing • Create and strengthen the role of knowledge and co-ordination groups of experts in international taxation, including the use of modern communication technology such as intranet • Build and strengthen networks of contact persons throughout the organization to ensure inputs from the organization as a whole and to provide support to staff tasked with activities that cannot be centralized • Ensure access to dedicated international documentation systems • Initiate pilots to conduct joint audits

14. Co-operation with universities and other educational institutions • Building and strengthening relationships with universities, business schools to encourage these institutions to include sufficient elements of international taxation in their study programmes • The same approach should be adopted for regulatory bodies such as accounting and legal organizations accountants

15. Induction training programmes • Include aspects of international taxation in induction training programmes for all officials who will likely be involved in international tax work • Consider including officials who may infrequently be involved in aspects of international taxation work to ensure they have an awareness of international taxation issues

16. Other recommendations on training • Concentration of international tax work in dedicated units at headquarters and in centralized dedicated organizational units for the managing of the tax affairs of large multinational taxpayers. These units need to have a sufficient size to be effective and sustainable • Facilitate staff learning foreign languages (English) and to participate in training programs (in foreign languages) offered by external institutions • Improving participation in international organizations by ensuring that the right people participate and attend meetings and by monitoring the participation through clear mandates and evaluation

17. Large Taxpayer Units18. Organizational Structures and Work Arrangements of Large Business UnitsThe Netherlands Nairobi, 14 – 18 February 2011

18. Facts and Figures • Income taxpayers 10.223.000 • via paper 17% • via floppy disk 9% • via internet 74% • Corporate taxpayers 750.000 • VAT taxpayers 1. 316.000 • Wage taxpayers 595.000 • Motor vehicles 10.944.000

19. Taxes and Charges collected by DTCA (2007): • Income / Wage tax 40 • Corporate tax 19 • VAT / excise duties 52 • Import duties 2 • Environmental tax 4 • Motor vehicle tax 3 • Other taxes 15 • Social Securities 32 • Total 162 • Budget TCA 2.5 (€ bn)

20. Structureof the Ministry of Finance Minister State Secretary Secretary-General Directorate-General for the Tax and Customs Administration Directorate-General of the Budget General Treasury Directorate-General forTax and Customs Policy and Legislation

21. Directorate -General for the Tax and Customs Administration(DGBel) Internal Accountancy unit International Affairs Innovation and Development Management Team Operational Management Enforcement policy Personnel Private taxpayers and procedural law Legal Affairs Business taxpayers Customs and environment Support and facilities Cassation Managementteam support

22. Tax and Customs Administration Special directorates Customs Privatel Taxpayers Small/ medium companies (North) Small/medium companies (South) Large & multinational companies Operational divisions • Computer/network service’/ • Software development • Fiscal/Economic Information and Investigation/ • Training, knowledge and • Communication • Facilities Services • Process and • Product development 80 district offices • REGISTRATION • AUDITING • COLLECTION • INVESTIGATION • SERVICE • ASSESSMENT integrated approach main processes

23. Structure and role of the Large Business Units • The units or teams are branche-oriented • for example: industries, transportation, trade, etc. • Advantage: • more knowledge about the target group • single desk for all tax affairs • compliance • higher quality of audits

24. Structure and role of the Large Business Units • Each team deals with 40 - 60 entities • The units or teams are branche-oriented • The entities are registrated in the Client information system (IKB) and the transparent risk assesment system (ATK) • The team gives each entity the treatment according to its taximportance and tax risks

25. Structure and role of the Large Business Units Integration on team or unit level • Processes • assessment, collecting and auditing • Taxes • income tax, company tax, value added tax and wage tax • ‘Small’ taxes, like dividend tax and capital tax are treated by specialised groups in the tax office

26. Structure and role of the Large Business Units • Each entity has a account manager • He is resposible for: • a correct and actual picture of the entity • keeping the treatment plan up-to-date • long range treatment • coming year treatment • input to the team plan • depth of treatment • to propose audits when necessary

27. Structure and role of the Large Business Units Personnel: • 50% academical • managers • legal specialists • financial-, EDP-, statistical auditors • account managers • 30% middle educated employees • the same activities, but lower taxexposure • 20% administration • Each employee has a personal computer with access to the national systems

28. Tasks Account Manager • Risk management • Treatment Plan • Entity overview & monitoring progress • Internal and external Relationship management • Company meeting • Provisional assesment • Preliminary consultation • Assessment

29. Tasks Tax Auditor • Preliminary consultation • Preliminary investigations • National projects • Fraud projects • Training and education • Other

30. Tasks Tax Inspector • Assessment • Assessment after audit • Appeal • Preliminary consultation • Fraud projects • National projects • Training and education • Other

31. Staffing • Total number of employees in the DTCA is 30.000 • Total number of employees in the LBU’s is 750, i.e. 2,5%

32. Staffing Staff in LBUs: • 50% academical • managers • legal specialists • financial-, EDP-, statistical auditors • account managers • 30% middle educated employees • the same activities, but lower taxexposure • 20% administrative support • Each employee has a personal computer with access to the national systems

33. Education • Tax Assurance Courses on the Business University Nyenrode together with tax advisors, CEO’s and CFO’s of VLE’s. • Collaboration with several universities for training programs on taxes and auditing for tax-, EDP-auditors, tax-inspectors etc. • Also collaboration with business schools for “training on the job” programs • Because of the new strategic approach a strong need of training on social skills • Masterclass training courses in negotiation and co-operation

34. Training on social skills • New strategy (more cooperative, preventive, instead of repressive) • More cooperation between the employees (working as a team) • More cooperation with the LBU • More internal sharing of knowledge • Main focus: trust, transparancy and understanding. • This takes a total new way of thinking. • Not only with the tax-employees, but also with the taxpayers, and the intermediaries (for instance KPMG, Trust Rules)

35. Hypegiaphobia,Trust rules (KPMG) 1. Make contact personal 2. Define common goals 3. Set the right example 4. Built trust with sensible rules 5. Share responsibility and trust 6. Stay on course and keep calm, even when things go wrong 7. Rely on informed trust, not on blind trust 8. Be mild onmistakes but crush abuse 9. Dear to experiment and learn from experiences

36. Knowledge Sharing • pilots with joint audits, with tax-auditors, tax-specialist and account-managers • expert- or knowledge groups: EG Very Large Enterprises, EG Tax/EDP/Statistical Audit/ EG International Fiscal Affairs, etc • intervision between audit teams, LBU’s: learn from each other, best and worst practices • a lot of experimenting, a lot of mistakes, but a lot lessons learned. • reactions of the taxpayers are quite positive!