G-27 bijeenkomst

Toespraak | 06-09-2011

Speech by State Secretary for Finance Frans Weekers on ‘Effects of enhanced relationships with taxpayers’ at the opening of the G27 meeting at the Ministry of Finance on Tuesday 6 September 2011

Ladies and gentlemen,

As the Dutch State Secretary for Finance, I would like to welcome you to our attractive ministry in the heart of The Hague.

It is only a stone’s throw from the location where our Queen will open the new parliamentary year in two weeks’ time.

A year that will be overshadowed by the financial crisis that is currently affecting the whole of Europe.

To deal with the crisis, it is essential to work together.

I am pleased that this meeting of the G27 will bolster the common ideas of the EU countries’ about taxation.

Let me extend a special welcome to the representatives of Philips and PwC.

As befits today’s theme, they will contribute to the programme.

Offering people the prospect of healthy and stable public finances is the most reassuring thing that governments can do in this period of financial instability.

That is why governments need to cut their spending and implementation costs.

They also need to prevent random, unexpected fluctuations in their revenue.

So a simple, robust and fraud-proof tax system is more urgent than ever.

Horizontal monitoring, the theme of today’s meeting, is a key tool for achieving this.

It saves time and energy, and improves compliance and monitoring.

It also leaves more time to tackle those who are really ‘unwilling’.

But banishing bureaucracy and reducing the administrative burden are no easy matter.

I recently discovered that The Twelve Tasks of Asterix, the first film about Asterix and Obelix, is now available on YouTube.

In this film from the 1970s, the Roman ruler Julius Caesar challenges them to carry out twelve assignments.

My favourite part is when Asterix and Obelix try to obtain Permit A38 in ‘The Place That Sends You Mad’.

They are confronted by unhelpful officials who keep sending them from one window to another and demand all kinds of forms that prove impossible to find.

The organisation is completely opaque.

In fact, it’s enough to drive anybody mad.

Asterix eventually beats the bureaucrats at their own game by asking for an imaginary permit, A39, which makes them all go crazy.

I suspect that many businesses might mistake ‘The Place that Sends You Mad’ for a tax office.

Conversely, tax officials often see taxpayers as a sort of Asterix who is trying to outwit them.

 

Unless this ‘us versus them’ mentality is abandoned, tax officials and businesspeople will continue to drive eachother mad.

Horizontal monitoring can help to bring about this change.

Because, it shifts the emphasis from rules and guidelines to agreements based on mutual trust and respect.

 Examples of what we need to avoid are the famous accounting scandals involving Enron, Worldcom, Parmalat and Ahold.

I’m sure you still remember them, even though it is now almost ten years since they threw the world of international finance into turmoil.

Investors lost their money, and several of the main players lost their freedom. The scandals led not only to new legislation but also to corporate governance codes.

In the Netherlands, the Tabaksblat Committee drew up the Dutch Corporate Governance Code, which took effect in late 2004.

It sets strict requirements for the governance of Dutch listed companies. Businesses have to demonstrate that they comply with the Code and are willing to fulfil their statutory obligations.

 

Our Tax Administration has a wide range of enforcement instruments. But they are only needed if companies are unwilling to comply with the rules.

Surveys show that most taxpayers do want to cooperate.

In which case horizontal monitoring is far more effective than traditional repressive measures.

For it is based on work that already has been done, and therefore on voluntary agreements and internal tax control systems.

Because companies differ widely, not least in size, there are different types and degrees of horizontal monitoring.

We have signed agreements with the very large companies and with the top of the intermediate-sized companies in the Netherlands.

The tax control framework allows these companies to manage all their tax processes and tax risks themselves.

The system is a logical supplement to existing internal and external control systems.

After all, managing and controlling risks is a key corporate responsibility. Risks not only for companies’ own employees, but also for their shareholders, supervisors and society at large.

 

In recent years, partly because of the financial and economic crisis, society has called on businesses to behave responsibly and uphold the law.

That is why our Tax Administration always want to discuss horizontal monitoring with a company’s CEO, instead of with its tax specialist alone.

Companies increasingly understand the merits of this.

Small and medium-sized enterprises – of which there are some 1.2 million in the Netherlands – cannot sign individual agreements.

But we are still using horizontal monitoring in this sector.

We do this by making maximum use of the work already done by tax service providers.

For smaller businesses, the accountant, auditor or tax advisor plays a vital role as far as their accounts, reports and tax returns are concerned. So it is only logical for horizontal monitoring to make use of their work.

In the case of small and medium-sized enterprises, we therefore sign agreements with tax service providers.

The Dutch Tax Administration has already concluded more than 150  agreements with accountants, tax advisors and their umbrella organisations.

Their customers can then sign up to the agreements by declaring that the information they give to their tax service providers will be accurate, complete and timely.

This means that the Tax Administration does not have to duplicate the work that other professionals have already done.

Ladies and gentlemen,

I am convinced that this new approach will help us drastically reduce the regulatory burden in the tax sphere. And that by sowing trust, we will reap greater cooperation.

I wish you all an inspiring day, full of fresh and ingenious ideas.

For Asterix certainly had a point when he made short work of ‘The Place That Sends You Mad’:

Bureaucracy must be fought with intelligence!

Thank you.