In The Netherlands a great number of activities take place with regards to tax proof software together with software suppliers. These relationships have been there for many years. The intensive cooperation with the service providers is essential to create the required knowledge and broad acceptation of these innovative extensions. When we speak of software suppliers, we do not only refer to fiscal and bookkeeping software suppliers but we include all software suppliers within the administrative chain which the entrepreneurs use.
1 General philosophe
In The Netherlands, the focus is to prevent errors in tax-applications as early as possible instead of correcting them afterwards and an approach that makes it as easy as possible for people to use it in the right way. This means that the NTCA, where possible, collaborates with public and private parties such as software suppliers:
creating the circumstances in which making mistakes are avoided as much as possible and in which the tax authority prevent fraud as much as possible;
collaborating with software developers and intermediaries to create an administrative chain of data from the first business transactions via bookkeeping software to a tax return and payment.
making it easy for citizens and businesses to declare the tax(es) owed correctly, completely and on time, for example by filling in (parts of) the tax return in advance (‘pre-completed / prefilled tax return’) and providing fiscal information and calculation aids (e.g. API’s) about tax obligations;
bases the extent and intensity of its actions towards individual taxpayers or groups of taxpayers on the relevant information about (causes of) the behaviour of the citizens and businesses concerned. Where the quality of the tax return is assured in advance, the tax authority can do without or with less supervision afterwards.
2 High number of tax returns filed by S2S due to cooperation with software supplier.
In the Netherlands, for over a decade now, Dutch businesses and public and private parties such as the NTCA are successfully making use of SBR (Standard Business Reporting). Millions of reports and tax applications are communicated each year based on the standards of SBR. This has indisputably led to a decrease in administrative burden for businesses.
- Enterprises (created persons) and entrepreneurs (born persons) must file their annual accounts (financial information) to the Business Register using the SBR-standards
- Enterprises must file their Corporate Income Tax (including financial information from the annual accounts) to the Tax Administration either:
- (14%) manually through MyTaxBusinesses or
- (86%) using the SBR-standards
- Entrepreneurs must file their personal Income Tax (including financial information from the annual accounts of their business) to the Tax Administration either:
- (27%) manually through MyTax or
- (73%) using the SBR-standards
When enterprises and entrepreneurs use the SBR standards (built-in in commercial software) they can either prepare and file themselves or use tax advisors as an intermediary.
Enterprises and entrepreneurs must file their VAT either:
- (60%) manually through MyTaxBusinesses or
- (40%) using the SBR-standards
Enterprises and entrepreneurs must file their Wage Taxes either:
- (4%) manually through MyTaxBusinesses or
- (96%) using the SBR-standards
3 Pre-filled income tax
Since 1990 the NTCA provides the natural persons who must apply for income tax with prefilled data (prefilled income tax). This data is gathered from several private and public service providers, like data on income, bank-accounts and properties. This started with a limited amount of data but has grown to a major aid for private taxpayers. Around 70% taxpayers receive a fully pre-filled tax return. This enabled a growth of compliance with the taxpayer and less need for supervision by the NTCA. In the beginning of this cooperation the delivering parties were rather reluctant, but national acceptance over the years has automatically led to full cooperation.
4 Pre-filled VAT and payment
As from 2019 the NTCA started a collaboration with a limited number of external service providers/software developers for accounting software. The aim of the collaboration was to pre-fill out the VAT tax return straight from the accounting software used by the entrepreneur. After pre-filling the tax return, the tax return could be filed S2S, service to service, to the NTCA. Also, the payment was integrated in the process. The amount due to be paid and the payment reference was pre-filled in an online payment system. As a result of these steps a (partly) administrative chain with compliance by design was achieved. Typing errors in all steps of the process were avoided. The success of this pilot lead to more software developers integrating the pre-filled VAT tax return and payment process into their accounting software. The prefilled payment for the wage tax has also been implemented by software suppliers.
5 Creating an administrative chain
Other cooperation initiatives involve software developers of business and accounting software together with accountants and fiscal advisors in the field of setting standards to use in the administrative chains. These standards see to general ledger formats in bookkeeping (RGS), general accounting control rules and information queries to compare with other businesses operating in the same fields (RDA) and Audit Files.
6 Providing ‘fiscal information and aids’ to software suppliers
In The Netherlands the Tax Administration want to share tax rules, and also wants to integrate the rules of risk and rejection into the administration chain (in the process from a business transaction via bookkeeping software to a tax return and payment). The administration also wants to share the functional analysis it usually performs retrospectively, so that it takes place upfront. By sharing all these rules with software suppliers, the results will be a ('seamless') integration of the taxation process. A pilot has started on providing pre-calculation and computations rules and services to software suppliers.
A pilot is being held at this moment where ‘fiscal information and aids’ are provided to software suppliers. Fiscal and legal requirements and hints and tips can be added to these software packages. Systems and humans must be supported to do the right things from the beginning of the administrative processes.
7 Usage of quality marks for certified software developers.
In The Netherlands a quality label ‘Reliable cash register’ exists for cash registers. An independent foundation with public private cooperation is in place to determine and audit the standards for the quality label. The independent corporation audits the standards of the cash register before it receives the quality label ‘Reliable cash register’. The use of a certified cash register is not obligatory but the use of one, gives a higher certainty on quality of the administration of the SMEs. When a tax audit takes place the quality label is considered and the time for auditing is limited compared to non-certified registers which is beneficial to both the Tax Administration as well as the SMEs.
8 Working towards a trusted ecosystem
Growing interests in online activity has led to an increasing need for online security and trust. Online reliability benefits from high-quality digital authentication, information exchange, expression of will and archiving. The eIDAS regulation creates the framework for these qualified trust services and the qualified trust service providers that provide them. Broad availability of qualified trust services brings a high level of online reliability within reach and provides a boost to the eSociety. Public and private organisations - including the NTCA - are initiating a reliable online ecosystem to make these qualified trust services accessible. With this ecosystem citizens, businesses and governments exchange information in a qualified way. The ecosystem is currently in the initiation phase. Technical tests have successfully demonstrated the proper functioning of the ecosystem. In a multiplier approach, these parties are experimenting with the ecosystem by implementing use cases whilst parallel setting up a structural governance and framework of agreements. On the basis of a green paper, public and private parties are jointly establishing a formal governance for the management, organization and functioning of the ecosystem.
A trusted online ecosystem creates new possibilities for digitising processes, where assurance is currently lacking or is a hassle. There is room for new digital forms in which the parties involved fulfil their social ambitions at an accelerated pace. These ambitions require a high degree of digital security, whereby actors (natural and legal persons) have digital information relevant to them in an easy and structured way. As a result, they act online with a high degree of legal certainty. An actor can be anyone in the digital society: a company, the government and also the individual citizen.
Trust & Compliance
