Nederlands Taxonomie Evenement

Toespraak | 07-05-2008

Ladies and gentlemen,

Society has revolutionised at breakneck speed. And information technology is to blame!

In my grandparents’ day, you had to go back a hundred years to find a world that looked completely different from their own. A world without modern conveniences such as domestic appliances, telephones, televisions and radios.

For people of my generation, you only have to go back about ten or twenty years. For someone like myself, who comes from the world of IT, this is a staggering thought.

At my ministry, there are quite a few civil servants – and they are far from old – who can still remember the time when there were dozens of secretaries typing documents, using carbon paper. That was not so very long ago. And I take pride in the fact that I was the first in my class at high school to use a word processor. My classmates were still using typewriters to write their essays.

I recently saw a repeat of a Dutch TV programme about new inventions. The presenter was standing on the edge of a forest next to a trolley to which a telephone was connected. He then rang the studio without using a telephone line. ‘Can you hear me?’ ‘Yes, loud and clear!’ The broadcast was from 1987! It was in the final years that this very building, the Evoluon, was a museum on science and technique. I remember visiting this remarkable flying saucer building as a kid.

We have grown accustomed to the accelerating pace of change. The changes have been positive (I am an optimist in this regard). That also applies to the relationship between government and citizens. The opportunities for communication, exchanging information and improving services are far greater than ever before.

But there is also a downside to this. IT does not always seem to have made life easier in recent years. That is not the fault of IT, but of the way we use it. In the days when entrepreneurs kept their records with a pen, the government could only ask for information that could actually be provided. The automation of bookkeeping made it possible to request a growing quantity of more detailed information. And that is exactly what happened. This has created one of the most important challenges we face: to reduce the regulatory burden on businesses.

[Simplification]

As some of you know, I used to be an entrepreneur. When I started my business, I quickly encountered the obstacles created by regulations. I experienced at first hand how much of a hindrance superfluous rules can be. That was one of the reasons I became a more active member of society.

And one of the main reasons I accepted the invitation to become State Secretary was my desire to simplify things. Working with Frank Heemskerk, the State Secretary for Economic Affairs, I want to do whatever I can to reduce the regulatory burden. I am convinced that this can be done. Especially since we have found that we can work very productively with entrepreneurs on this issue. After all, they are the ones who can tell us where it hurts.

We have already made progress. An example is the one-stop shop, introduced recently this year and run by the Tax and Customs Administration and the Chamber of Commerce. It enables anyone starting a small business to obtain their VAT number and Chamber of Commerce number in one go, whereas in the past it could take as long as several weeks. This is a big improvement. No longer do entrepreneurs have to register everywhere. We now have one single registration and that’s it.

One of the irritations we have vigorously tackled is the requirement to supply statistics. This part of the administrative burden has been reduced by about 70 per cent since 1994. We now carry out more random checks, and smaller businesses have to fill in fewer questionnaires from the CBS, the Dutch statistics office.

[Standard business reporting]

This brings me to the subject of requests for information and the role of standard business reporting.

Let me begin by saying that society cannot operate without rules. They are needed to define everyone’s role, rights and obligations. Companies are accountable to their shareholders and to society. This is why we have annual accounts.
Inevitably, these rules impose restrictions. But we cannot abolish them all. Everyone would agree on this.

At the same time, we do need to examine carefully whether any of the rules are unnecessary. That has always been our focus. But a large part of the regulatory burden does not come from legislation. Far more comes from the rules of implementing organisations. In other words, the main source of the regulatory burden is the way in which legislation is implemented.

The government is free to ask anything, but does it need to? Is all that information really required to enforce the law? Sometimes we forget to ask what the cost is to those who have to supply the information.

Accountancy firms are beginning to have difficulty finding people to do this type of work. It is dull and monotonous. Accountants have more interesting things to do. Yet at the moment it still has to be done. So urgent action is needed.

The key problem is that there are numerous agencies asking each company for information. And they all impose their own requirements. So the entrepreneur has to present the information in different ways. But can’t we turn this situation on its head? Information requirements should be geared to businesses’ own processes. Government authorities should coordinate their approach. If we all start speaking the same language, it will make things much easier.

Standard business reporting is the answer to this problem. Companies often use it to present financial information to investors. For example, it allows you to make a comparison between Philips and Shell.

But we are now using it for a different purpose: to tackle the administrative burden. It is becoming a fundamental part of the relationship between government and businesses. So I share the enthusiasm about XBRL. At the push of a button, you can deliver information to the Chamber of Commerce, the CBS or the Tax Administration.

[Role of Tax Administration]

We launched the XBRL project in 2004. We started drawing up a taxonomy of annual fiscal accounts, and the requirement to supply statistics. We did this to ensure that what we ask for matches what is available. And it works! The project is now expanding in other sectors where fiscal accountability is required. The Tax Administration plays a major role in the project. It does of course request a great deal of information, and it is often seen as the strictest inspector.

We are now able to receive several types of tax return in XBRL. In January 2007 we were ready to receive profit and corporation tax returns for 2006 in XBRL. We were then one step ahead. There were difficulties to start with, but the project has gradually reached critical mass. Since 1 April of this year it has been possible to submit VAT returns in XBRL. The first were received on 4 April.

Salaries are next in line. Salary returns, weekly reports and first workday notifications can be submitted in XBRL from 1 July. Where possible, I would like to abolish first day notifications altogether. In other cases, they should at least become far easier to deal with.

The Tax Administration’s desire to promote the use of XBRL makes it attractive for businesses to invest in software that supports the entire process, from the initial entries in the records to the reports to the Chamber of Commerce, the CBS and the Tax Administration.

For companies, taxes are a cost item. Taxpayers and tax consultants often used to say that the Tax Administration asked too many unnecessary questions. There was some truth in this.

So the Tax Administration wants to go a step further. We are trying to make it possible to use XBRL for recording information at transaction level (XBRL GL). In combination with a so-called Enhanced Relationship between taxpayers and the Tax Authorities, this will benefit both entrepreneurs and the Tax Administration. In the longer term, the Tax Administration could enter certain information in tax returns in advance. This could put an end to the massive influx of tax returns that occurs at present. The Tax Administration will then obtain information from a company if it is required at a certain stage of the supervision process.

The Netherlands has made transparency and cooperation its watchwords. This can be seen in the way the Tax Administration operates.

For example the Enhanced Relationship. We are steadily moving towards a situation of greater equality, with growing emphasis on mutual trust between taxpayers and tax authorities. Most companies are honest and want legal certainty. They can obtain this by making advance agreements with the Tax Administration.

In this way everybody’s responsibilities and options are laid down clearly, and the agreements are then complied with. Viewed in conjunction with the move towards greater transparency in business, our focus on greater mutual trust reflects a general trend in modern society.

How are we tackling this issue? Through voluntary agreements. We make advance agreements and then make no further inspection visits.

[Conclusion]

XBRL is a splendid example of how the government and business community can work together. Market players themselves are giving me advice on what an abridged and simplified profit return might look like. This is unprecedented. You can see how inspiring cooperation can be. And I will certainly ensure that the abridged profit return becomes a reality.

The Dutch approach has been adopted internationally. I am delighted that the Australian government will present their project next.

The government has said it will draw up a taxonomy. And we are working closely with the Chamber of Commerce, the CBS and the Tax Administration. It is now up to the business community to use XBRL.

Another welcome fact is that annual accounts can now have a fiscally-based structure. There is a strong tendency towards fiscalisation of accountability, and this is also impacting other sectors. Convergence based on fiscal accountability: I’m sure you now understand my enthusiasm!

Cooperation between the government and business community generates creativity and good ideas. To reduce the administrative burden even further, we must clearly continue to work together. I promise to give this my full attention.

I think that the world of today will quickly become a thing of the past. It will not be long, before we can hardly imagine how we were able to live without XBRL. In a few years you will be saying to a younger colleague: ‘Would you believe that I once heard a State Secretary encouraging people to use XBRL?’ Your colleague will no doubt conclude that you must be very old. Mark my words.

Thank you.