Rethinking Tax Services The Changing Role of Tax Service Providers in SME Tax Compliance (eBook)

Table of contents 9
Preface 5
Foreword 7
Executive summary 15
Recommendations 16
Chapter 1. Introduction 19
Context and background 20
Traditional versus new types of (tax) service providers 20
Figure 1.1. Stakeholders in SME compliance 21
Purpose of the study 21
Methodology 22
Structure of the report 23
Note 23
Bibliography 23
Chapter 2. Perspectives on SMEs and tax compliance 25
Improving tax compliance 26
Box 2.1. Drivers and factors of tax compliance 26
Box 2.2. Secured chain approach and centralised data approach 27
Figure 2.1. Chain versus system perspective regarding tax compliance 28
Chain versus system perspective 29
Bibliography 29
Chapter 3. SME tax services: A changing landscape 31
SMEs and tax compliance 32
Impact of new technologies on SME tax compliance 33
Figure 3.1. Schematic overview of technologies 33
Mobile computing 34
Table 3.1. Possible impact and risks on SMEs, TSPs and tax administrations when adopting different technologies for tax compliance 35
Box 3.1. The rise of new mobile tax services 37
Box 3.2. Mobile as a first point of access to the internet in emerging economies 37
Box 3.3. Block Chain Technology 38
Box 3.4. Opportunities for mobile platforms/payment systems 38
Internet of Things (IoT) 39
Box 3.5. A digital by default approach – Estonia 39
Cloud computing 40
Box 3.6. Seamless provision of data 41
Box 3.7. Personalised digital tax accountants in the United Kingdom 42
Box 3.8. Secure OnLine: The Netherlands 42
Big Data & Advanced Analytics
Box 3.9. Better insight in SMEs’ behaviour and needs 43
Switching to a service perspective on SME tax compliance 43
Figure 3.2. A service perspective on tax compliance 44
New service concepts 44
Box 3.10. Specialisation or one-stop shop 45
Box 3.11. Co-operative compliance and SMEs 45
Box 3.12. The need for user-centric tax service design 46
New patterns in customer interaction 47
Box 3.13. Increasing electronic interface 47
New business partners to provide the solution 48
New revenue model 48
New organisational delivery model 49
Box 3.14. Voice of the customer 49
SME user needs regarding tax compliance 49
Box 3.15. Tax advice on a real time basis 51
Notes 51
Bibliography 52
Chapter 4. Tax service providers in a dynamic market 55
The role of tax service providers in taxation 56
The impact of technological and service innovations 56
Figure 4.1. Driving forces changing the tax service landscape 57
Changing roles in the current market for tax services (new business models) 57
Figure 4.2. Changes in the current market for tax services 58
Box 4.1. A shift in roles of TSPs: three personas 59
TSPs’ shifting business models 60
Table 4.1. Examples of traditional and emergent TSP business models 61
A shift towards value-added services 61
Box 4.2. A shift towards high value services 62
The need for collaboration 63
Box 4.3. Tax agent trends in the United Kingdom 63
Box 4.4. Towards automated taxation 64
Strategic IT skills & information architecture
Box 4.5. Using the Internet of Things (IoT) to develop new services 65
New cost structure and revenue models 65
Entrance of new service providers and new types of services 65
Box 4.6. Online accounting services 66
Box 4.7. Software developers as key stakeholders: Australia 67
Dynamics in the TSP market 68
Box 4.8. Increasing efficiency through better APIs 69
TSPs’ expectations towards tax administrations 70
Box 4.9. Access to shared data 71
Box 4.10. Important conditions for better co-operation according to TSPs 72
Notes 72
Bibliography 73
Chapter 5. How tax administrations can relate to tax service providers: four network strategies 75
Two key dimensions: openness and governance 76
Level of openness 76
Governance: government-driven versus market-driven 77
Four network strategies 77
Figure 5.1. Four network strategies governing the relationships between tax administrations, established and new TSPs and other stakeholders 78
Controlled network strategy 79
The adaptive network strategy 79
Table 5.1. Services provided by tax administrations to TSPs 80
Hybrid closed network strategy 80
Hybrid open network strategy 81
Box 5.1. Registration of Tax Preparers Program: Canada 81
Box 5.2. Tax Professional Engagement Strategy: Australia 82
Stylised characteristics of the four network strategies 83
Strategy towards TSPs 83
Figure 5.2. A tax administration’s strategic positioning for the four network approaches in a changing tax landscape 84
Box 5.3. Working with Our Partners program of ATO: Australia 85
Level of collaboration and the distribution of power 85
Value proposition towards SMEs and new products & services
Regulation of TSPs 86
Box 5.4. Regulation of tax service providers: South Africa 88
Infrastructure and scope for data and information sharing 89
Box 5.5. Changing the network approach 89
Notes 90
Bibliography 90
Chapter 6. Finding and implementing a tax service provider strategy 91
How to relate to TSPs: finding your strategy 92
Make a TSP strategy part of your broader (SME) compliance strategy 92
Box 6.1. Improving tax compliance via the role of tax agents: New Zealand 93
Assess trends and developments in the tax landscape and adapt your strategy if necessary 94
Box 6.2. Sensing user needs and technological options 94
Include principles on data sharing in your TSP strategy 95
How to relate to TSPs: putting your strategy into action 96
Take a customer centric approach 96
Assess the need for regulating TSPs 97
Decide how you want to engage with TSPs 98
Box 6.3. Communication mechanism with TSPs and taxpayers: China 98
Box 6.4. Establishing a dialogue with final users and TSPs: Sweden 99
Box 6.5. HMRC’s Agents Strategy: United Kingdom 100
Box 6.6. Greater collaboration with tax service providers: Singapore 101
Box 6.7. Canada Revenue Agency – Chartered Professional Accountants of Canada Framework and Committees – Canada 102
Set out a roadmap 103
Framework conditions 103
Technical preconditions 104
Information exchange 104
Box 6.8. Online support and Open Data: The Netherlands 104
Box 6.9. Standard Business Reporting: Australia 105
Security 105
Box 6.10. Data security and privacy (1) 106
Box 6.11. Data security and privacy (2) 106
Legal preconditions 106
Capabilities and organisational culture 107
Box 6.12. Organisational capabilities for a tax administration to adapt and improve services 108
Notes 108
Bibliography 109
Chapter 7. Conclusions and recommendations for tax administration 111
Conclusions 112
Recommendations 114
Annex A. Findings from the survey of tax administrations and tax service providers 117
Perceived impact of new technological and business developments on tax service design and compliance 117
Figure A.1. Perceived impact of technological and business developments on tax service design and compliance 118
Figure A.2. Perceived relevance of some business developments for tax service landscape 120
Perceived relevance of some business developments for tax service landscape 120
Statement 1: New mobile payment options likely to impact SME tax compliance and service-design 121
Statement 2: Online bookkeeping and cloud computing likely to impact SME tax compliance and service-design 121
Statement 3: Business models of traditional tax service providers are changing 121
Statement 4: New players play an increasingly important role in tax compliance and design of tax services. 121
Statement 5: Outsourcing of “low-value” tax services to other parties (and/or low income countries) 122
Opportunities and risks 122
Box A.1. Opportunities and risks of technological and business developments 122
Current strategies of tax administrations in dealing with tax service providers 123
Regulation of the TSP market 123
Co-operation with new tax service providers 123
Full engagement strategy with tax service providers 124
Co-operation with professional bodies 124