9789403519838_WEB (5)

§17.08 Ronald Russo role, possibly also for other jurisdictions. The impact of the reports would in our opinion be greater if the actual research is performed by an independent party and not the tax administration itself (which is now usually the case). §17.08 FINAL REMARKS There are many other aspects that could also be mentioned in this chapter. There is the aspect of the size of the company: usually the programme is just open for large multinational companies, but there is also a tendency to have programmes for smaller companies (e.g., in the Netherlands, Austria and Poland). Another facet is the degree to which a jurisdiction’s tax authority communicates transparently about its participa- tion in ICAP: in some jurisdictions there is basically silence on this point (for instance, in Japan, Canada and Australia). These and many other interesting details that are provided in the chapters in this book merit further comparative research. 274

Index A CbCR, 51-52 mandatory disclosure obligations ACAs. See Annual compliance arrangements (ACAs) CbCR, 51-52 income tax return schedules, 49-51 ADR. See Alternative dispute resolution international dealings schedule, (ADR) 49-50 Advance price agreement procedure, 141 RTP schedule, 50-51 Aggressive tax planning SARS (see Top 1,000 tax performance the Netherlands, 169-170 programme: SARS) Polish co-operation program, 180-181 taxpayer segments Spain’s actions against, 196-197 Alternative dispute resolution (ADR) Top 100 (see Top 100 population) CAP in U.S., 245 Top 1000 (see Top 1,000 tax Annual compliance arrangements performance programme: SARS) (ACAs), 36-37, 44-46 Top 320 private groups (see Top Annual wheel. See LTO annual work 320 private groups tax plan performance programme) Arm’s length principle, 140, 256, 269 Top 100 population (see Top 100 Audit risks population) management system, 99 Top 320 private groups tax Australia, 56-57 performance programme (see approach to co-operative compliance Top 320 private groups tax ACAs, 36-37 performance programme) ATO’s compliance model, 35-36 Top 1,000 tax performance corporate tax transparency, 39-40 programme: SARS (see Top FCA model, 36 1,000 tax performance ICAP, 37 programme: SARS) justified trust, 37-38 Austria other taxpayer engagement advance ruling, 70-71 products and mechanisms, application, 71 relationship with, 39 bK v., 72-73 taxpayer segments (see subhead: coverage of, 71-72 taxpayer segments) notification, 72 BEPS Action Plan, 78 275

Index bK (see Begleitende Kontrolle (bK)) fiscal reliability, appraisal of, 65 co-operative compliance for small inspection of application, 65 project to law, from businesses, 73 ambition, 59-60 horizontal monitoring (HM) process, Austrian Fair-Play-Program in 2010, 73 60 ICAP 2.0 conclusions, 63 evaluation, 61-63 advantages, 76-77 hard facts decision, 61 Good Faith principle, 75 horizontal monitoring (HM), 60-61 ICAP v. bK, 77 online interviews, 62-63 legal classification under Austrian process workshops, 61-62 requirements procedural law, 75-76 accounting standards, 64 status and possibilities, 74-75 applicant, 64 standard audit file-tax (SAF-T), 73 corporate group application, 64 unilateral co-operative compliance fiscal criminal integrity, 64 general requirements, 64 approach, 74 procedure upon participation, 65 Austrian Fair-Play-Program in 2010, 60 revenue threshold, 64 special requirements, 64 B TCF, 64 takeaways of, 70 Becker’s theory of crime, 4 BEPS Action Plan Begleitende Kontrolle (bK) Austria, 78 BEPS Action 14 (see Double taxation advance ruling v. coverage/scope, 72 entry point, 72 prevention, subhead: BEPS procedure, 72 Action 14) temporal/monetary expenditure, Japan, 141-142 Bilateral APA procedure, 20, 29, 86, 141, 72-73 146 auditor’s point of view, 69-70 C ICAP v. coverage/scope, 77 outcome, 77 Canada, 79-81 respect to legal certainty, 77 compliance initiatives, previous scale, 77 approach to large business legal incorporation, 63 compliance, 82-83 legislative process, 63 joint audits, 82 procedural law offshore tax information program, appraisal of fiscal reliability, 67 81 bK procedure, 68 taxpayers classified, 83 fiscal reliability, appraisal of, 67 voluntary disclosures program, 81 procedure upon participation, 65 ICAP 1.0 requirements (see subhead: acceptance, 84-85 requirements) TCF, 66-67 termination of bK, 68 procedure upon participation application, 65 audit upon entrance, 65 276

Index Canada Revenue Agency’s issues listed in tax year 2019, 242 experience, 87-88 objectives for CAP, 242 pre-CAP MOU, 242 informality, 86-87 taxpayers in compliance outcome letters, 85-86 process, 85 maintenance phases, 242 ICAP 2.0, 88-89 no-change letter, 233 changes, 88-89 phases issue resolution, 89 persistency of informality, 89 CAP phase, 234 ICAP, involvement with, 83-84 compliance maintenance, 234 CbCR. See Country-by-country reporting compliance management bridge, (CbCR) 234 Collaborative relationship, 199, 227 pre-CAP, 233 relationship management and dispute Norway, 162 Commercial awareness, 7 resolution ADR, 245 CCMs, by, 227 communication, 243-244 Comparative risk assessment (CoRA), elevation & dispute resolution, 33, 76, 78 244-245 Compliance assurance program (CAP) in requirements, current U.S. application information, 240-241 evaluation of CAP phase, 238-239 participation in pre-CAP phase, GAO assessment of CAP, 247-248 goals, meeting of, 246-247 eligibility of, 238 goal of, 231-232 suitability for CAP, 239-240 history review and acceptance of returns, changes in 2018, 236 compliance maintenance bridge 242-243 full acceptance letter, 243 phase, 237 no change letter, 243 compliance maintenance phase, 235 partial acceptance letter, 243 non acceptance of CAP applications Sarbanes-Oxley legislation, 232 termination of, 246-247 for 2017 tax year, 235-236 Confrontation, 201 participants, 236 Controls risks, 106, 128, 208-209 pre- and post-tax return filing, 236 Co-operative compliance pre-CAP phase, 235 Australia (see Australia, subhead: taxpayers, 237-238 ICAP and approach to co-operative assessment of risk, 250 compliance) described, 248-249 Austria (see Austria) ICAP 2.0, 249 authority to co-operation, from participation by U.S., 249-250 Becker’s theory of crime, 4 Internal Revenue Service (IRS), deterrence mechanisms, 5-6 equity theory, 5 231-232 psychological contract theory, 5 legal framework, 234 slippery-slope theory, 5-6 memorandum of understanding tax morale, 5 (MOU), 241-242 277

Index compulsory TCF, 273 Co-operative relationships delimitation of object of study, 3-4 CBTP, under, 199 elements, 1-2 Spain formal instrument required, 272-273 Code of Best Practices, 204 ICAP and, 2-3, 33-34 Spanish tax administration and resident companies, 205 cops and robbers approach, 6-7 tax control framework and risk countries adopting co-operative management, 208-209 tax authority and taxpayer, between compliance, 8 Poland, 183 enhanced relationship approach, Spain, 200, 202 7-8 Co-operative tax compliance principle of equality, 10-11 building better tax control tax assurance versus tax certainty, 9 frameworks, 105, 199 transparency of programs, lack of, Cops and robbers approach, 6-7 11 CoRA. See Comparative risk assessment Italy (see Italian co-operative (CoRA) compliance programme) Corporate governance Japan (see Japan) jurisdictions, 2 ACAs, 45 the Netherlands (see The Netherlands) rules, 167 Norway (see Norway) Spain, in, 202-203, 205, 208 Poland TCF as corporate governance TO, 177-178 regulations, 176 CC Act, 178 U. S., 232, 241 CC Bill, 178 Country-by-country reporting (CbCR), Head of the NFA, 178 Polish co-operative compliance 16, 39, 51-52, 76-78, 102, 142 Germany, 111 programs (see Polish co-operative compliance programs) D Polish co-operative compliance Deterrence mechanisms, 5-6 programs (see Polish Disclosure co-operative compliance programs) mandatory disclosure obligations possibility of agreeing to disagree, 272 CbCR, 51-52 regulatory framework approaches, 10 income tax return schedules, 49-51 schemes, evaluation of existing, international dealings schedule, 273-274 49-50 Spain (see Spanish co-operative Poland, 184 compliance programs) RTP schedule, 50-51 tax strategies, 273 U.S. (see Compliance assurance nature and application by taxpayers in program (CAP) in U.S.) Spain, 204-205 working in present and real-time consulting procedures, 272 program for tax avoidance Co-operative compliance bill (CC Bill), arrangements in U.K., 217 178, 180, 182 voluntary (see Voluntary disclosure) Double taxation prevention, 253-254 278

Index access to MAPs effect of area of concern, 258-259 area of concern, 265 BEPS Action 14, 260 BEPS Action 14, 265-266 Directive, 259-260 Directive, 265-266 MLI, 260 MLI, 265-266 ICAP 2.0, 266, 268-269 area of concern impact of recent developments access to MAPs, 258-259 access to MAPs, 258-260 costs and interest-asymmetry, costs and interest-asymmetry, 263-264 domestic legal proceedings, 263-264 blocking effect of, 265 domestic legal proceedings, resolution for double taxation, 260-262 blocking effect of, 265-266 tax authorities, relationship with, resolution for double taxation, 264 260-262 BEPS Action 14, 256 tax authorities, relationship with, access to MAPs, 260 costs and interest-asymmetry, 264 264-265 domestic legal proceedings, interest-asymmetry, prevention of, blocking effect of, 265-266 MAP statistics reporting framework, 268 257 MAP and, 254-255 peer monitoring mechanism, 257 resolution for double taxation, 262 access to, 258-260 tax authorities, relationship with, MLI, 257-258 264-265 access to MAPs, 257-258 costs and interest-asymmetry costs and interest-asymmetry, 264 area of concern, 263-264 domestic legal proceedings, BEPS Action 14, 264 Directive, 264 blocking effect of, 265-266 MLI, 264 resolution for double taxation, 262 tax authorities, relationship with, Directive access to MAPs, 259-260 264-265 aim of, 256 prevention of interest-asymmetry, 268 benefit compared to existing resolution for double taxation mechanisms, 256 costs and interest-asymmetry, 264 area of concern, 260-261 domestic legal proceedings, BEPS Action 14, 262 blocking effect of, 265-266 Directive, 261-262 foundations, 256 MLI, 262 resolution for double taxation, tax authorities, relationship with, 261-262 tax authorities, relationship with, 264-265 264-265 unilateral adjustments, 268 domestic legal proceedings, blocking E E-Bilanz, 103, 107-108, 112 Enhanced Dialogue. See Pilot project Enhanced relationships Canada Revenue Agency, 86-87 described, 7-8 279

Index OECD administrative offenses, 94-95 Spain, 196 directors, liability of, 94 U.K., 218 embezzlement, 95 indemnification, 95 pilot project in Norway personal liability for tax evasion, 94 activities, 157 sales receipts, liability in cases of, design, 157 LTO and large corporate taxpayers, 94 156 tax evasion, 94 participation in voluntary, 157 tax compliance environment (see Tax Spain, 196, 199 compliance, subhead: Equity theory, 5 Germany) Exchange of information, 28, 125, 206 taxpayer and tax authorities, External audit, 44, 241 relationship between (see Tax authorities, subhead: and F taxpayer in Germany) Good faith principle Forum on tax administrations (FTAs), meaning, 75 15, 198 H Austria, 74, 76 Germany, 109, 114 Head of the National Fiscal ICAP 2.0 (see ICAP 2.0) Administration (Head of the Japan, 144-145 NFA), 178, 180-193 Spain, 198 Forward compliance arrangements Horizontal monitoring (HT), 175-176 empirical research on (FCA) model, 36 large companies supervision process, review of, 171-172 G Stevens Committee, 171 fines and, 169 Germany, 91 future developments, 172 compliance: new ways of working, internal controls, 168 111-112 process in steps CbCR, 111 compliance reconnaissance, E-Bilanz, 107-108 166-167 electronic tax audits, 108-109 covenant and evaluation, 167 joint audits, 109-110 dealing with problems from past tax CMS, 104-106 years, 167 working digitally, 107-108 initial meeting, 166 Zeitnahe Betriebsprüfung, 102-104 transparency, 165-166 co-operative compliance trust, 164-165 economic model, 95 understanding element, 165 responsive regulation, 95 slippery slope framework, 95-96 I taxpayers decisions, 95 ICAP v. German initiatives, 112-113 ICAP. See International compliance liability in cases of non-compliance 280

Index assurance programme (ICAP) APA process, 21 ICAP 1.0. see also Tax authorities Canada (see Canada) CAP in U.S. and Canada (see Canada, subhead: ICAP 1.0) assessment of risk, 250 described, 248-249 German participation in, 113-114 ICAP 2.0, 249 ICAP 2.0 CbC Reporting Tax Risk Assessment Austria (see Austria, subhead: ICAP Questionnaire, 18, 21 2.0) first ICAP pilot Canada (see Canada, subhead: ICAP kick-off meetings, 17 2.0) MNE groups, 16-17 outcomes and launch of ICAP 2.0, double taxation prevention, 266, 268-269 17-19 Germany German participation in, 114 launch of ICAP 2.0, outcomes from ICAP 1.0, 113-114 ICAP 2.0, 114 first ICAP pilot and (see initiatives v. ICAP, 112-113 International compliance participation in ICAP, 113-114 assurance programme (ICAP), G20 tax certainty agenda, 16 subhead: launch of ICAP 2.0, Italy in, participation of, 133-134 outcomes from first ICAP pilot Japan (see Japan, subhead: ICAP in) and) launch of ICAP 2.0, outcomes from U.S., 249 Impartiality, 7, 183 first ICAP pilot and LTO, 154 CbC Reporting Tax Risk Assessment Information system risk assessment (IRSA) tool, 55, 57 Questionnaire, 18 Inherent risks face-to-face meeting, 18 BRR methodology, 223 kick-off meeting, 18 factor described, 219 MNE groups, 17-18, 18 Internal audit, 189 tax administrations, 18-19 Internal control MAPs, 21 guidance with respect to the Netherlands, 175 HT Guidance, 168 risk assessment, 21 TCF, 167 standard documentation package, 21 HT Guidance, 176 tax certainty, as tool to improve, monitoring, 168 tax planning, 168 19-20 rule UNE 19602, 201 U.K., 227-228 smaller companies in Spain, 172-173 International dealings schedule, 49-50 TCF, 167 Italian co-operative compliance U.K. publication of tax strategy, 224-225 programme senior accounting officer, 223-224 anti-abuse interpello, 122 U.S., 240-241 anti-avoidance interpello, 123 International compliance assurance explanatory memorandum, 127 programme (ICAP), 15, 37, 201 Internationalization Decree, 128 interpello between tax administration and taxpayer 281

Index described, 116-117 147-148 new investments, on, 123-124 PCS ordinary interpello, 118-122 right to interpello, 117 bilateral APA procedure, 141 Taxpayer’s Rights Charter, 117 de facto procedure, 140-141 legal and non-legal consequences of super-royalty rule, 140 tax administration, 138-140 adhesion tax compliance burden under tax advance rulings, 130-131 consequences, 129-130 system (see Tax compliance, participants to shortened procedure subhead: burden under tax system in Japan) of ruling, 130 transfer pricing rules, 140 Tax Administration, 131-133 Joint audits Taxpayer’s Bill of Rights, 131 described, 109-110 Legislative Decree, 126-127 Germany and the Netherlands, 110 non-resident entities, 129 Justified trust methodology, 41-42 ordinary interpello accounts and tax result, 47-48 act of address, as, 121 benefits, 48-49 International Ruling, 121-122 benefits of obtaining, 48-49 practical application of, 128-129 identifying tax risk and understanding probative interpello, 122 significant and new TCF, 126 transactions, 44-47 Italy, 134-135 JT FA co-operative compliance programme accounts and tax result, 47-48 benefits, 48-49 (see Italian co-operative identifying tax risk and compliance programme) understanding significant and ICAP, participation in, 133-134 new transactions, 44-47 internationalization of businesses tax risk management and advanced rulings, 124-125 governance (tax control pre- and post-filing phase, 125 frameworks), 42-44 tax risk and transactions J advance pricing arrangements, 47 annual compliance arrangements, Japan, 137-138, 148-149 44-46 BEPS Action Plans, 141-142 PCRs, 46-47 ICAP in, 144-145 tax risk management and governance comments, 144 (tax control frameworks), de facto or legal procedure, 146 42-44 Multilateral ICAP procedure, 146-147 L OECD 2013 ICAP report, 146-148 public consultation document by Large corporate taxpayers, 7 OECD, 145 LTO and, 156 tax complexity and certainty, PCRs, 46-47 144-145 taxpayers and administration, LTO annual work plan, 158 282

Index M Horizontal monitoring (HT)) ICAP, 175 MLI. See Multilateral instrument (MLI) MNEs, co-operative compliance for MNEs. See Multinational enterprises challenges and possible friction (MNEs) points, 167-171 Multilateral co-operative compliance conflict within HT or regarding Poland, 184 status of covenant, 170-171 Multilateral instrument (MLI) covenants, 168-169 double taxation prevention, 257-258 fines and HT, 169 access to MAPs, 258-260 future developments, 172 costs and interest-asymmetry, 264 HT (see Horizontal monitoring described, 257-258 domestic legal proceedings, (HT)) blocking effect of, 265-266 internal controls, guidance with resolution for double taxation, 262 tax authorities, relationship with, respect to 264-265 HT Guidance, 168 monitoring, 168 Multinational enterprises (MNEs), 16-21, tax planning, 168 26-34, 74-78, 144-146, 201-202 TCF, 167 SMEs, co-operative compliance for, ICAP 2.0, 17-18, 266 the Netherlands (see The Netherlands, 172-173 challenges/possible friction points, subhead: MNEs, co-operative compliance for) 174-175 OECD Guidelines for Multinational future developments, 175 Enterprises, 199 HT process in steps tax authorities, 23 companies, application and Mutual agreement procedures (MAPs), 15, 24 cancellation for, 173-174 disadvantages, 24 compliance agreement discussions, Double Taxation Convention, in, 125 double taxation prevention, 254-255 173 area of concern, 258-259 preliminary consultations, 174 BEPS Action 14, 260 tax return/randomly selected Directive, 259-260 MLI, 260 audit/evaluation, filing and multilateral, 147 processing, 174 statistics reporting framework, 257 Netherlands Tax and Customs Mutual trust, 33, 165, 187, 198, 202-203 business and HMRC, 216 Administration (NTCA), 30-31, transparency and, 165, 202-203 33 Norway, 151-153, 160-162 N Central Tax Office for Large Enterprises (LTO) way The Netherlands, 175-176 annual cycle, 155 horizontal monitoring (HT) (see challenge, 159-160 contacts, 155 described, 153 external stakeholders, among, 154 jurisdiction, 152 large corporate taxpayers and, 156 283

Index legal specialists and other specialist compliance defined, 156 teams, 154 Japan normal process after extension of OECD 2013 ICAP report, 146-148 central office, 158-159 public consultation document, 145 Norway (see Norway, subhead: parallel assessment and control routine, 155 OECD) Polish co-operative compliance risk assessment methodology, 156 tax professionals, 153-154 programs (see Polish large company/group of companies co-operative compliance programs, subhead: OECD defined, 152-153 co-operative compliance measuring compliance model, and) Spanish co-operative compliance corporations, 160 programs, 196-197 tax administrator, 160 tax audit, 159 P taxes, recovering of, 159 normal process after extension of PCRs. See Pre-lodgement compliance reviews (PCRs) central office collaboration enhancement, 158-159 PCS. See Pre-confirmation system (PCS) LTO annual work plan, 158 Peer monitoring mechanism, 257 VAT, 158-159 Pilot project (Norway) OECD definition of compliance, 156 enhanced relationships, in obstacles to compliance, 161-162 activities, 157 parallel assessment and control design, 157 LTO and large corporate taxpayers, routine, 155 156 pilot project (see Pilot project) participation in voluntary, 157 risk assessment methodology, 156 Polish co-operative compliance national survey, 156 programs OECD methodology, 156 pilot project (see Pilot project) access to any means of appeal, 193 NTCA. See Netherlands Tax and challenges to development, 193-194 communication within, 191-193 Customs Administration co-operation agreement (NTCA) elements, 185 O legal nature and enforceability of, OECD. See Organisation for economic 185-186 co-operation and development rights and obligations, 185 (OECD) risk management, risk appetite and Offshore Tax Information Program, 81 tax strategy requirements, Openness 186-187 taxpayers, 185 NFA, 184 validity and termination, 186 U.K. model, 218 external assistance in improving Organisation for economic co-operation quality of actual relationship, and development (OECD) 284

Index 193 Spain, 208-209 OECD co-operative compliance model, tax audits in Germany, during, 99 tax control framework in Spain, and, and eligible taxpayers, 180-182 208-209 entry upon application, 182-183 tax governance and, 53 legal regulation, 180 Tax Risk Management and mandatory disclosure, 184 multilateral co-operative Governance Review Guide (Guide) compliance, 184 ATO client engagement teams, 44 program entry conditions, 183-184 control objectives linked to Justified tax control framework Trust focus area (JT FA), 42-43 adaptation of tax authorities’ audit rating system, 44 self-assessment procedures for intensity to characteristics of reviewers, 43-44 internal, 190-191 TCRM process, 221-222 entry condition, as an, 187 independent audit of tax function, S 190 monitoring audit, 189 SARS. See Top 1,000 tax performance pre-entry evaluation of, 188-190 programme: SARS preliminary audit, 188-189 requirements, 187-188 Secretariat proposal for a ‘unified tax audit, 188-190 approach’ under pillar one, 145 voluntary character, 185 Pre-confirmation system (PCS), 137, Single-documentorientated approach, 76 Slippery-slope theory 140-142, 147, 148 Pre-lodgement compliance reviews extrinsic motivators, 5 individual and corporate taxpayers, 6 (PCRs), 36, 39, 46-47 intrinsic motivator, 5-6 Proportionality, 7, 190-191 taxpayer’s power and trust, 6 Social influence theory, 5 Q Spanish Association of Normalization Quasi-legal agreement, 141 and Certification (AENOR), 200 Spanish co-operative compliance R programs Reportable tax positions (RTPs) agreements reached by parties, schedule 207-208 categories, 50-51 approaches that models based on higher risk arrangements, 51 Responsiveness, 7 convergence of civil and tax law, Revenue bodies, 7, 13-14 203 Risk management co-operation agreement, 186-187 fiscal appearances of companies ICAP and HT, 175 and Spanish tax administration, OECD methodology for tax, 156 202-203 reform of law of entities of capital, 203 rule UNE 19602, 203-204 Spanish General Tax Law, 203 285

Index communication procedures between Articles 63 and 64, 207 tax authorities taxpayer within, Stevens Committee, 171, 172 206 Super-royalty rule, 140 conditions for acceptance and T programs application Tax administrations fiscal risks, level of exposure to, Germany, 96 206 competent authority, 96 federal tax authorities, 96 rule UNE 19602, 205-206 state tax authorities, 96 controversial issues of ICAP, 18-19 Japan, 138-140 agreements reached by parties, taxpayer and Italian tax 207-208 administration described, 116-117 approaches that co-operative new investments, on, 123-124 compliance models based on, ordinary interpello, 118-122 202-204 right to interpello, 117 Taxpayer’s Rights Charter, 117 communication procedures between tax authorities and taxpayer, 206 Tax assessment bK, 77 conditions for acceptance and Germany, 97 programs application, 205-206 LTO annual work plan dictation of, 158 disclosure rules and application by taxpayers, 204-205 Tax assurance Commissioner role, 226 parties, agreements reached by, ICAP 1.0, 30-31 207-208 letter, 91, 114 MNEs, 23 tax control framework and risk report (TAR), 38, 41-42 management, 208-209 tax certainty v., 9 Top 1,000 tax performance disclosure rules and application by programme (see Top 1,000 tax taxpayers, 204-205 performance programme: SARS) historical analysis and connection with OECD’s reports Tax audit Germany Action 13 of the BEPS Plan, 202 electronic tax audits, 108-109 Action 14 of the BEPS Plan, 202 medium-sized businesses, 97-98 BEPS Plan, 200 micro- and small businesses, 97-98 CBTP, 198-200 risk management system, 99 ICAP, 201 Norway, 159 rule UNE 19602, 200-201 Polish co-operative compliance Spanish FLC, 197-198 programs, 188-190 tax transparency and fiscal certainty, 200 parties, agreements reached by, 207-208 phenomenon, 196-197 tax control framework and risk management, 208-209 Spanish Ley General Tributaria (LGT) Article 87, 207 Article 116, 208 286

Index independent audit of tax function, Tax behavior, 5, 201, 205, 206 190 Tax burden monitoring audit, 189-190 Japan (see Tax compliance, subhead: preliminary audit, 188-189 burden under tax system in Tax authorities, 23-24 Japan) evaluation and scalability, 32-33 ICAP Poland, 178-179 co-operative compliance, and, 33-34 U.K. (see United Kingdom (U.K.), ICAP 1.0 (see subhead: ICAP 1.0) instruments, relation to other, 32 subhead: administrative risk assessment, high-level compliance burdens) Tax certainty character of ICAP, 32 Canada, 83-84, 90 ICAP 1.0 G20 tax certainty agenda, 16 ICAP 2.0, 88-89 achievements, 29 ICAP as tool to improve, 19-20 APA process, 29 MNEs seeking, 32 documentation, 28 report, 24 information, 28 tax assurance v., 9 jurisdictions participated, 26-27 Tax compliance outcomes, 29-30 burden in Poland, 178-179 risk assessments for individual burden under tax system in Japan blue-colored tax returns, 143 MNEs, 27 bookkeeping standards, 143-144 role of lead country, 28-29 corporate income taxation, 144 timelines, 27 levy system, 142 issues national taxes, 142-143 high-level character of ICAP risk taxpayers, 143 white-colored tax returns, 143 assessment, 32 Canada, 83-84 materiality concept, 31-32 defined, 151 MAPs, 24 Germany MNEs and, transparency between, 29 compliance culture and tax morale, outcome letters, 30-31 92-93 outcomes, 29-30 co-operative compliance, 95-96 pilot character of ICAP, 25-26 liability in cases of non-compliance, relationship with companies in 93-95 HM, as tool, 63 Germany, 97 management system, 104-105 role in Germany, 100 Norway, 158-159 services transactions, 29-30 personal liability, 93-95 and taxpayer in Germany, 101-102 review of large companies supervision process, 171-172 companies and tax authorities, rule UNE 19602, 200-201 relationship between, 97 Spain, 196-197 programs based on Spanish CBTP, relationship programs, 100-101 202 risk management system during tax audits, 99 role of tax authorities, 100 structure of tax administration, 96 tax audits, 97-98 287

Index rule UNE 19602, 200-201 Tax Risk Management and voluntary tax compliance, 205-206, Governance Review Guide (the Guide), 42 208 Tax compliance risk management Tax inspection, 184 Tax intermediaries process (TCRM) process, 221-222 Norway, 151 Tax control framework (TCF) Spain, 199 bK Tax morale, 5, 6 implementation, 66-67 Germany, in, 92-93 re-certification, 66 theories TCF defined, 66 Italian co-operative compliance decisions of taxpayers, 95 programme, 126 economic model, 95 Polish co-operative compliance responsive regulation, 95 programs slippery slope framework, 95-96 adaptation of tax authorities’ audit Tax obligations intensity to characteristics of Germany, in, 92 internal, 190-191 independent audit, 190 entry condition, as an, 187 irregularities in fulfilment, 189-190 independent audit of tax function, level of compliance in Germany (see 190 monitoring audit, 189 Tax compliance, subhead: pre-entry evaluation of, 188-190 Germany) preliminary audit, 188-189 Poland verification of fulfilment of, requirements, 187-188 190-191 tax audit, 188-190 Spanish tax administration, 202 risks, 66 voluntary nature of fulfilment of, 187 U.K. Tax Ordinance (TO), 177-178 publication of tax strategy, 224-225 Taxpayers senior accounting officer, 223-224 Australia (see Australia, subhead: Tax controls. See Tax control framework taxpayer segments) (TCF) CAP in U.S. Tax cooperation, 84, 88, 199, 200 history, 237-238 Tax environment, 7, 90 taxpayers in compliance Tax evasion, 24 maintenance phases, 242 Austria, 74, 77 classification in Canada, 83 defined, 94 communication procedures between ICAP action against, 74 tax authorities and, 206 personal liability for, 94 compliance maintenance phases, in, Tax governance 242 ATO Italian tax administration and (see Tax IRSA tool, 55 administrations, subhead: principles for effective tax taxpayer and Italian tax governance, 55 administration) tax risk management and, 42-44 nature of disclosure rules and application by, 204-205 Polish co-operation program OECD 288

Index co-operative compliance programme, 54-56 model, 180-182 commercial deal, 56 Tax planning IRSA tool, 55 aggressive (see Aggressive tax principles of effective tax governance, planning) described, 168 55 Tax reform, 153-154 Top 1,000 tax performance programme: Tax return filing and processing, 174 SARS schedules, 49 experience to date, 53-54 international dealings, 49-50 Justified Trust programme, links to, RTP, 50-51 Tax risks 53 ATO’s approach to, 36 Transparency classes used by tax authorities, 99 HMRC, 225 in corporate tax in Australia, 39-40 management and governance (tax corporate tax transparency in control frameworks), 42-44 OECD methodology for management Australia, 39-40 of, 156 HT, 165-166 transactions, and mutual trust and, 165, 202-203 advance pricing arrangements, 47 programs, lack of transparency of annual compliance arrangements, tax authorities and MNEs, between, 44-46 PCRs, 46-47 29 TCRM process. See Tax compliance risk tax transparency and fiscal certainty, management process (TCRM) process 200 TO. See Tax Ordinance (TO) Trust-based relationship, 7, 165 Top 100 population justified trust methodology, 41-42 U accounts and tax result, 47-48 benefits of obtaining, 48-49 United Kingdom (U.K.), 228-229 identifying tax risk and administrative compliance burdens understanding significant and large business tax forum, 215 new transactions, 44-47 office for tax simplification (OTS), tax risk management and 214-215 governance (tax control ongoing advice and consultation, frameworks), 42-44 215 risk categories tax information and impact notices higher risk taxpayers, 41 (TIINs), 214 key taxpayer, 40-41 communication procedures, 225-226 key taxpayers with significant co-operative compliance, 216-217 concerns, 41 businesses falling under Large Top 320 private groups tax performance Business Directorate, 217-218 design features, 218-223 disclosure program for tax avoidance, 217 DoTAs regime, 217-218 taxpayers and tax authorities, co-operation with, 218 design features of co-operative 289

Index compliance, 218 ICAP, 227-228 behavioral risk dimension, 219 Large Business Directorate, 228 business risk review (BRR), 220, program evaluation, 227 publication of tax strategy, 224-225 223 senior accounting officer, 223-224 high risk corporates program, 219 tax uncertainty, 215-216 HMRC business risk review audit TCF trail, 220 publication of tax strategy, 224-225 large businesses, 222 senior accounting officer, 223-224 risk-based model, 219 United States (U.S.) compliance tax compliance risk management assurance program (CAP). See process (TCRM) process, 221-222 Compliance assurance program two-tier model, 220 (CAP) in U.S. dispute resolution, 226 Her Majesty’s Revenue and Customs V (HMRC) Voluntary compliance, 231 customer centric strategy, 214 Voluntary disclosure, 38, 81 large business strategy, 216 large business tax forum, 215 Z objectives, 213 ongoing advice and consultation, Zeitnahe Betriebsprüfung, 98, 102-104, 111, 112, 272 215 operations, 214 program evaluation, 227 public consultations, 214 290

EUCOTAX Series on European Taxation (1) Peter HJ Essers, Guido JME de Bont & Eric CCM Kemmeren (eds), The Compatibility of Anti-Abuse Provisions in Tax Treaties with EC Law, 1998 (ISBN 90-411-9678-1). (2) Gerard TK Meussen (ed.), The Principle of Equality in European Taxation, 1999 (ISBN 90-411-9693-5). (3) Michael Lang (ed.), Tax Treaty Interpretation, 2001 (ISBN 90-411-9857-1). (4) Pasquale Pistone, The Impact of Community Law on Tax Treaties: Issues and Solutions, 2002 (ISBN 90-411-9860-1). (5) René Offermanns, The Entrepreneurship Concept in a European Comparative Tax Law Perspective, 2002 (ISBN 90-411-9887-3). (6) Michael Lang & Mario Züger, Settlement of Disputes in Tax Treaty Law, 2002 (ISBN 90-411-9904-7). (7) Carlo Pinto, Tax Competition and EU Law, 2003 (ISBN 90-411-9913-6). (8) Michael Lang, Hans-Jörgen Aigner, Ulrich Scheuerle & Markus Stefaner, CFC Legislation, Tax Treaties and EC Law, 2004 (ISBN 90-411-2284-2). (9) Mattias Dahlberg, Direct Taxation in Relation to the Freedom of Establishment and the Free Movement of Capital, 2005 (ISBN 90-411-2363-6). (10) Michael Lang, Judith Herdin & Ines Hofbauer, WTO and Direct Taxation, 2005 (ISBN 90-411-2371-7). (11) Dennis Weber, Tax Avoidance and the EC Tray Freedoms: A Study of the Limitations under European Law for the Prevention of Tax Avoidance, 2005 (ISBN 90-411-2402-0). (12) Félix Alberto Vega Borrego, Limitations on Benefits Clauses on Double Taxation Conventions, 2005 (ISBN 90-411-2370-9). (13) Michael Lang, Josef Schuch & Claus Staringer, ECJ-Recent Developments in Direct Taxation, 2006 (ISBN 90-411-2509-4). (14) Reuven S. Avi-Yonah, James R. Hines Jr. & Michael Lang, Comparative Fiscal Federalism. Comparing the European Court of Justice and the US Supreme Court’s Tax Jurisprudence, 2007 (ISBN 978-90-411-2552-1). (15) Christiana HJI Panayi, Double Taxation, Tax Treaties, Treaty-Shopping and the European Community, 2007 (ISBN 978-90-411-2658-0). (16) Dennis Weber, The Influence of European Law on Direct Taxation: Recent and Future Developments, 2007 (ISBN 978-90-411-2667-2). (17) Michael Lang & Pasquale Pistone, The EU and Third Countries: Direct Taxation, 2007 (ISBN 978-90-411-2665-8). (18) Oskar Henkow, Financial Activities in European VAT: A Theoretical and Legal Research of the European VAT System and Preferred Treatment of Financial Activities, 2007 (ISBN 978-90-411-2703-7). (19) Michael Lang (ed.), Tax Compliance Costs for Companies in an Enlarged European Community, 2008 (ISBN 978-90-411-2666-5).

(20) Michael Lang (ed.), Source versus Residence. Problems Arising from the Alloca- tion of Taxing Rights in Tax Treaty Law and Possible Alternatives, 2008 (ISBN 978-90-411-2763-1). (21) Ioanna Mitroyanni, Integration Approaches to Group Taxation in the European Internal Market, 2008 (ISBN 978-90-411-2779-2). (22) Rolf Eicke, Tax Planning with Holding Companies. Repatriation of US Profits from Europe:Concepts, Strategies, Structures, 2008 (ISBN978-90-411-2794-5). (23) Peter Essers et al. (ed.), The Influence of IAS/IFRS on the CCCTB, Tax Account- ing, Disclosure and Corporate Law Accounting Concepts: ‘A Clash of Cultures’, 2008 (ISBN 978-90-411-2819-5). (24) Tonny Schenk-Geers, International Exchange of Information and the Protection of Taxpayers, 2009 (ISBN 978-90-411-3142-3). (25) Raymond Adema, UCITS and Taxation: Towards Harmonization of the Taxation of UCITS, 2009 (ISBN 978-90-411-2839-3). (26) Michael Lang, Jianwen Liu & Gongliang Tang (eds), Europe–China Tax Treaties, 2010 (ISBN 978-90-411-3216-1). (27) Michael Lang, Pasquale Pistone, Josef Schuch & Claus Staringer (eds), Proce- dural Rules in Tax Law in the Context of European Union and Domestic Law, 2010 (ISBN 978-90-411-3376-2). (28) Sjaak J.J.M. Jansen, Fiscal Sovereignty of the Member States in an Internal Market: Past and Future, 2011 (ISBN 978-90-411-3403-5). (29) Dennis Weber & Bruno da Silva, From Marks & Spencer to X Holding: The Future of Cross-Border Group Taxation, 2011 (ISBN 978-90-411-3399-1). (30) Claus Bohn Jespersen, Intermediation of Insurance and Financial Services in European VAT, 2011 (ISBN 978-90-411-3732-6). (31) Sabine Heidenbauer, Charity Crossing Borders: The Fundamental Freedoms’ Influence on Charity and Donor Taxation in Europe, 2011 (ISBN 978-90-411- 3813-2). (32) Michael Lang, et al., The Future of Indirect Taxation: Recent Trends in VAT and GST Systems around the World, 2012 (ISBN 978-90-411-3797-5). (33) Harm van den Broek, Cross-Border Mergers within the EU: Proposals to Remove the Remaining Tax Obstacles, 2012 (ISBN 978-90-411-3824-8). (34) Michael Lang, et al. (eds), Tax Treaty Case Law around the Globe – 2011, 2012 (ISBN 978-90-411-3876-7). (35) Dennis Weber (ed.), CCCTB: Selected Issues, 2012 (ISBN 978-90-411-3872-9). (36) Daniël Smit, EU Freedoms, Non-EU Countries and Company Taxation, 2012 (ISBN 978-90-411-4041-8). (37) Rita de la Feria, VAT Exemptions: Consequences and Design Alternatives, 2013 (ISBN 978-90-411-3276-5). (38) Karin Simader, Withholding Taxes and the Fundamental Freedoms, 2013 (ISBN 978-90-411-4842-1). (39) Madeleine Merkx, Establishments in European VAT, 2013 (ISBN 978-90-411- 4554-3). (40) Carla De Pietro, Tax Treaty Override, 2014 (ISBN 978-90-411-5406-4).

(41) G.K. Fibbe & A.J.A. Stevens (eds), Hybrid Entities and the EU Direct Tax Directives, 2015 (ISBN 978-90-411-5942-7). (42) Gerard Staats, Personal Pensions in the EU, 2015 (ISBN 978-90-411-5953-3). (43) Michael Lang & Ine Lejeune (eds), VAT/GST in a Global Digital Economy, 2015 (ISBN 978-90-411-5952-6). (44) Massimo Basilavecchia, Lorenzo del Federico & Pietro Mastellone (eds), Tax Implications of Environmental Disasters and Pollution, 2015 (ISBN 978-90-411- 5611-2). (45) Cristina Trenta, Rethinking EU VAT for P2P Distribution, 2015 (ISBN 978-90-411- 6137-6). (46) Marie Lamensch, Edoardo Traversa & Servaas van Thiel (eds), Value Added Tax and the Digital Economy: The 2015 EU Rules and Broader Issues, 2016 (ISBN 978-90-411-6612-8). (47) Raffaele Petruzzi, Transfer Pricing Aspects of Intra-Group Financing, 2016 (ISBN 978-90-411-6732-3). (48) Mario Grandinetti (ed.), Corporate Tax Base in the Light of the IAS/IFRS and EU Directive 2013/34: A Comparative Approach, 2016 (ISBN 978-90-411-6745-3). (49) Bruno da Silva, The Impact of Tax Treaties and EU Law on Group Taxation Regimes, 2016 (ISBN 978-90-411-6905-1). (50) Michael Lang, Alfred Storck & Raffaele Petruzzi (eds), Transfer Pricing in a Post-BEPS World, 2016 (ISBN 978-90-411-6710-1). (51) Marta Papis-Almansa, Insurance in European VAT: Current and Preferred Treatment in the Light of the New Zealand and Australian GST Systems, 2017 (ISBN 978-90-411-8360-6). (52) Wolfgang Speckhahn, Real Estate Investment Trusts In Europe: Europeanising Tax Regimes, 2017 (ISBN 978-90-411-8360-6). (53) Frank J.G. Nellen, Information Asymmetries in EU VAT, 2017 (ISBN 978-90-411- 8837-3). (54) Erik Ros, EU Citizenship and Direct Taxation, 2017 (ISBN 978-90-411-8584-6). (55) Werner Haslehner, Georg Kofler & Alexander Rust (eds), EU Tax Law and Policy in the 21st Century, 2017 (ISBN 978-90-411-8815-1). (56) Claudia Sanò, National Legal Presumptions and European Tax Law, 2018 (ISBN 978-90-411-6613-5). (57) Christoph Marchgraber, Double (Non-)Taxation and EU Law, 2018 (ISBN 978-90- 411-9410-7). (58) Dennis Weber & Jan van de Streek (eds), The EU Common Consolidated Corporate Tax Base: Critical Analysis, 2018 (ISBN 978-90-411-9233-2). (59) Werner Haslehner (ed.), Investment Fund Taxation: Domestic Law, EU Law, and Double Taxation Treaties, 2018 (ISBN 978-90-411-9669-9). (60) Jérôme Monsenego, Selectivity in State Aid Law and the Methods for the Alloca- tion of the Corporate Tax Base, 2018 (ISBN 978-90-411-9413-8). (61) José Manuel Almudí Cid, Jorge A. Ferreras Gutiérrez & Pablo A. Hernández González-Barreda (eds), Combating Tax Avoidance in the EU: Harmonization and Cooperation in Direct Taxation, 2019 (ISBN 978-94-035-0154-3).

(62) Werner Haslehner, Georg Kofler & Alexander Rust (eds), Time and Tax: Issues in International, EU, and Constitutional Law, 2019 (ISBN 978-94-035-0354-7). (63) Nathalie Wittock, Sales Promotion Techniques and VAT in the EU, 2019 (ISBN 978-94-035-0861-0). (64) Carla De Pietro (ed.), New Perspectives on Fiscal State Aid: Legitimacy and Effectiveness of Fiscal State Aid Control, 2019 (ISBN 978-94-035-1415-4). (65) Giorgio Beretta, European VAT and the Sharing Economy, 2019 (ISBN 978-94- 035-1435-2). (66) Claudio Cipollini, Special Tax Zones and EU Law: Theory, Implementations, and Future Challenges, 2020 (ISBN 978-94-035-1885-5). (67) Gianluigi Bizioli, Mario Grandinetti, Leopoldo Parada, Giuseppe Vanz & Alessandro Vicini Ronchetti (eds), Corporate Taxation, Group Debt Funding and Base Erosion: New Perspectives on the EU Anti-Tax Avoidance Directive, 2020 (ISBN 978-94-035-1170-2). (68) Ronald Hein & Ronald Russo (eds), Co-operative Compliance and the OECD’s International Compliance Assurance Programme, 2020 (ISBN 978-94- 035-1951-7).

Co-operative Compliance and the OECD’s International Compliance Assurance Programme Edited by Ronald Hein & Ronald Russo Prominent among initiatives addressing the urgent need for a common understanding between multinational enterprises (MNEs) and national tax authorities about risks and risk assessment is the International Compliance Assurance Programme (ICAP), which provides a channel for MNEs to engage in simultaneous discussions with multiple national tax administrations, thus enhancing the potential for advance tax assurance. To a certain extent, the ICAP represents the internationalization of Co-operative Compliance frameworks which were, until then, restricted within the borders of single jurisdictions. This book is the first to investigate Co-operative Compliance alongside with the ICAP, describing developments in twelve countries (Australia, Austria, Canada, Germany, Italy, Japan, the Netherlands, Norway, Poland, Spain, the United Kingdom, and the United States). Following a general introduction, two opening perspectives on the ICAP are presented, one from the OECD and one from a participating tax administration (the Netherlands), leading to the twelve country reports and a special chapter on transfer pricing, which is the main issue in international tax disputes. Specific elements reviewed include the following: – criteria to enter the programme; – the range of taxes covered by the programme; – real-time consultation procedures; – appeal procedures within the programme; – the possibility to ‘agree to disagree’ and to continue Co-operative Compliance even in cases of litigation; – risk management strategies within tax authorities; – corporate administrative compliance burden; and – main sources of tax uncertainty. Country reports are contributed by tax professionals and tax academics experienced in dealing with Co-operative Compliance and the ICAP. Each report addresses the same questions, so that all the reports cover the same features of domestic relationship approaches and the ICAP. A final chapter reviews the collected contributions and offers some concluding remarks. Although the ICAP process probably will undergo further adjustments, it is certain that the road to more international cooperation between tax authorities and MNEs is now open. This timely book, as a comparative review of the implementation of the ICAP among leading jurisdictions active in global trade, provides matchless insights into trends, similarities, differences and their implications. It will be welcomed by all stakeholders in the international tax community, including lawyers, taxation authorities and academics. ESET 68