Centre for Tax Policy and Administration

Organisation for Economic Co-operation and Development

Large Taxpayers Units

8.General overview of the international practises for the Management of Large Business

Nairobi, 14 – 18 February 2011

FTA Compliance Management of Large Business Task group

Experiences and Practices of Eight OECD Countries

Criteria to identify large businesses vary from country to country as one or more measures are used such as turnover, assets, tax paid, specific industry, and other special factors (e.g., international dealings).

The characteristics of large taxpayers are generally very similar in all participating countries, which describe them as being complex in their structure, having multiple operating entities with international business dealings, and are responsible for a high portion of tax revenue.

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International practices Industry segmentation

All tax administrations structured the compliance operations of their large taxpayers division or unit on an industry segment, which for a number reflected the main business activities of their economy.

In addition to being organized along certain industry lines, some tax administrations have special units to perform risk analysis and intelligence gathering, provide technical advice, and to monitor and evaluate performance.

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International practices(2)Risk Management

Tax Administrations are using risk management extensively to manage and prioritise their casework.

The level of risk analysis and response vary from one country to another due to the different experience with compliance issues and the degree of non-compliance by large taxpayers.

Compliance issues may vary from one country to another. However, all participating countries cite tax compliance issues related to international transactions and international business structures as major areas of concern and focus.

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International practices(3)Enhancing relationship

A focus on building a better relationship between the tax administration and the large taxpayers is a common approach across countries.

There is an increase in compliance activity through non-traditional approaches. The trend is to move from post-filing of tax return examination to “real-time” evaluation of risk and compliance issue resolution.

A number of countries have instituted various programs to provide certainty to the large taxpayers and early identification and resolution of compliance issues.

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International practices(4)Corporate Governance

Corporate governance principles and practices are gaining more attention and focus by certain tax administrations as a number of them believe that the responsibility of a company’s tax policy should be at Board level since tax is an important financial element.

Corporate governance principles instituted in some countries are affecting large taxpayers’ behaviour and there are indications that tax administrations are using the corporate governance principles to improve tax compliance.

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International practices(5)Training of staff

All participating countries have programs to develop, train and maintain a highly qualified workforce.

In most countries tax policy is not the responsibility of the Tax Administration, but Tax Administration play an active role in providing input and feedback on tax policy to ensure that the tax administration’s needs are taken into consideration.

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International practices(6)Use of technology

Technology is used to: improve the quality of service to large taxpayers to manage compliance, including the capability

to identify risk early to increase efficiency in operating the large

business unit. (by developing programs to collect additional data in a timely fashion to enhance compliance risk assessment, making resource decisions and ensuring consistent treatment of large taxpayers operating in certain business segments).

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9. Workshop

1. What criteria are used in your country to identify Large Business2. What percentage of your taxpayers do qualify as Large Business. What

percentage of tax revenue do they represent3. What do you consider to be the main characteristics of Large Business

Tax payers in your country4. How are the compliance operations of the Large Taxpayers Units

organised5. Does your Tax Administration use Risk Management techniques in its

operations of the Large Taxpayers. Explain your answer.6. What are other (specific) characteristics of the management of Large

Business Taxpayers7. How do you train your LTU staff?

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