Successful strategies for striking the balance between service and enforcement activities

1
Successful strategies for striking the balance
between service and enforcement activities

• Second meeting of the Forum on Tax Administration
• 1-2 June 2005
• Dublin, Ireland

Sven Rune Greni Head of Business Taxation
Department Directorate of Taxes Norway
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Service and enforcement - Competing strategies?

• The political/external perspective
• User-oriented tax administration
• The internal perspective
• Improved service improved compliance
• The resource perspective
• Conclusion Both strategies have to be adressed
  - the challenge is to find a good balance
  between them

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Compliance

• We will improve compliance, by
• Making it easy for the loyal taxpayers to comply
• Avoiding to make the loyal taxpayers disloyal
• Making it difficult to remain disloyal
• Having emphasis on defeating tax crime

4
Our strategic approach to improve compliance

• Main strategies of the Norwegian Tax
  Administration 20052008
• We shall make it easy to do things right
• We shall defeat black economy and tax crime
• We shall cooperate actively with others

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Our challenge - and our strategy
. .
Enforcement
Service
??
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Our business model - general features

• The assessment is based on information from the
  taxpayer and third party information
• Legal requirement to inform Tax Authority
• Most taxpayers comply voluntarily
• Segmentation and selection based on risk analysis
• Sample control
• Three main categories of taxpayers
• 1) employees (wage earners)
• 2) self-employed and companies
• 3) tax criminals (underground economy)

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Production - The green and red course

Taxpayer information 3rd party information
Control
Production
Assessment
Revenue
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Our business model for employees

• Pre-populated tax return
• Based on third party information
• Covering the most important tax relevant
  information
• Tailor-made tax return from 1999
• Internet reporting from 1999 - improved in 2005
• Examined and accepted/corrected by the taxpayer
• Planned new regime Silent acceptance
• Automatic controls (filters) in the production
  system
• Conclusion Most of the tax returns follow the
  green course

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Our business model - business area segmentation

• Segmentation based on compliance risk assessment
• Influenced by whether tax professionals have
  assisted the taxpayer (accountants, auditors,
  advisors)
• A targeted part of tax returns follow the red
  course
• Transfer of resources from the employees area
• No strategic segmentation between self-employed
  and companies
• Specific segments
• Large enterprises
• Petroleum companies
• Foreign taxpayers

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Electronic services

• Electronic tax information on internet
• Rules, forms, etc.
• Electronic reporting - extensive use of internet
• Our strategy is to use the Altinn-portal
• Altinn is the common government internet portal
  of Norway, developed by the Tax Administration,
  Statistics Norway and the national Register
  Center

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Electronic reporting - tax returns
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Enforcement - tax crime

• Make disloyal taxpayers loyal
• Avoid to make loyal taxpayers disloyal
• To maintain/increase the legitimacy of the tax
  system and the tax administration

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Enforcement - tax crime

• Establishment of 5 tax crime units
• Cooperation with Police Prosecution authorities
• Forum on economic crime
• Cooperation since 1993 between
• Confederation of Norwegian Business and Industry,
  
• Norwegian Labour Union,
• Norwegian Association of Rural Municipalities
• Tax Administration
• Cooperation with building construction
  industry
• The Serious Business-project
• Established a separate information unit
• Tax information about subcontractors

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Conclusion Better balance reached!
Enforcement
Service