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Paolo Valerio Barbantini ( Large Business Division - Director )

Paolo Valerio Barbantini ( Large Business Division - Director ). Italy’s approach towards cooperative compliance and tax control framework.

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Paolo Valerio Barbantini ( Large Business Division - Director )

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  1. Paolo Valerio Barbantini (Large Business Division - Director) Italy’s approachtowards cooperative compliance and taxcontrolframework LARGE BUSINESS COMPLIANCE: the importance of the tax control framework and how technology can help Tax Administrations and large business work together (Istanbul, May 24th, 2013)

  2. Italy’s approachtowards cooperative compliance and taxcontrolframework SUMMARY INTRODUCTION ITALY’S EXPERIENCES ON COOPERATIVE COMPLIANCE WAY FORWARD: PILOT PROJECT ON COOPERATIVE COMPLIANCE/TAX CONTROL FRAMEWORK 2

  3. 1. INTRODUCTION MainStepstowards a cooperative compliancestrategy: 3

  4. 2. ITALY’S EXPERIENCES ON COOPERATIVE COMPLIANCE • APA program (2004): advanced form of cooperation between taxpayers and tax administration • Tax payers………..: legal certainty concerning the agreed treatment of complex tax issues • Tax Authorities…: taxpayers’ compliance enhanced • Consequences of the program • On field experience on APA leading to an intensive training program (several courses/workshops for field auditors, incl. cascade training) • Supply of methodologies and tools (i.e. data-bases) • Basis to introduce new and additional forms of cooperative compliance (Risk management monitoring, TP documentation requirements etc.) 4

  5. 2. ITALY’S EXPERIENCES ON COOPERATIVE COMPLIANCE The Large Business Taxpayers’division Implemented as from January 2009 New framework for tax compliance of LBTs Based on a risk analysis approach In line with the Italian Revenue Agency’s mission: a) to tackle tax evasion and avoidance, not only by means of enforcement measures, but also through initiatives aimed at increasing the voluntary compliance of taxpayers; and b) to assist taxpayers to understand and meet their tax obligations 5

  6. Italy – Practicalissues 2. ITALY’S EXPERIENCES ON COOPERATIVE COMPLIANCE The benefits of the new approach • better allocation of resources • increased awareness and know-how about tax planning opportunities arising from the exploitation of aggressive schemes; • identification of areas which cannot be tackled (only) with audits and that require the introduction of legislative or administrative changes; • increased awareness of taxpayers on the improved detection and response strategies’ capabilities of the revenue bodies, with direct and indirect benefits on tax compliance; • overall improvement in the quality of the audits with direct benefits in terms of well-grounded tax assessments, reduction of tax litigations and of quick recovery of taxes. 6

  7. Italy – Practicalissues 2. ITALY’S EXPERIENCES ON COOPERATIVE COMPLIANCE TaxCollection: trend 2006-2011 7

  8. Italy – Practicalissues 2. ITALY’S EXPERIENCES ON COOPERATIVE COMPLIANCE Audits (2011) Assessments (2011) Settlements (2011) 8

  9. 2. ITALY’S EXPERIENCES ON COOPERATIVE COMPLIANCE • 2010: Transfer Pricing documentation requirements • Prior to 2010 no provisions in Italian Tax Law on TP documentation requirements (art. 26 Law Decree May 31st 2010, n. 78) • Effects: taxpayers granted with penalty protection in case of t. p. adjustments, if appropriate documentation is prepared • System based on a burden rather than on general obligations (no penalties, but incentive to compliance) • Consequences • Overall appreciation of the system (% of LBT’s covered almost equal to 60%) • Important step in the light of a voluntary disclosure system • Possible evolutions: cooperative compliance programmes 9

  10. Italy – Practicalissues 3. WAY FORWARD: PILOT PROJECT ON COOPERATIVE COMPLIANCE/TAX CONTROL FRAMEWORK • Need to introduce a coherent program against scattered (positive) cooperative compliance experiences • Benefit from other countries’ experiences and work carried out by international organizations (e.g. OECD, recent FTA report: “Co-operative Compliance: a Framework – From enhanced relationships to co-operative compliance); • Mutual understanding and role of the Tax Control Framework; • Setting shared rules within an ad-hoc pilot project (voluntary admission, specific requirements etc.); • TCF important but just a “piece” (although important) larger strategy. • Starting date = Summer 2013 10

  11. Questions?

  12. Thanks for your attention

  13. Paolo Valerio Barbantini (Large Business Division - Director) Italy’s approachtowards cooperative compliance and taxcontrolframework LARGE BUSINESS COMPLIANCE: the importance of the tax control framework and how technology can help Tax Administrations and large business work together (Istanbul, May 24th, 2013)

  14. Paolo Valerio Barbantini (Large Business Division - Director) Useoftechnology in dealingwith LBT in Italy - The RiskAnalysisProfiling LARGE BUSINESS COMPLIANCE: the importance of the tax control framework and how technology can help Tax Administrations and large business work together (Istanbul, May 24th, 2013)

  15. THE RISK ANALYSIS PROFILING FOR LBT Specific software application created: “Risk AnalysisProfiles”

  16. THE RISK ANALYSIS PROFILING FOR LBT B A Management Profiling C Planning

  17. THE RISK ANALYSIS PROFILING FOR LBT General info (General information) (Identification details of company) (Information on partners/shareholdersofthe LT) (Other information) 17

  18. THE RISK ANALYSIS PROFILING FOR LBT Features (Analysis of the economicbackground) (Descriptionof the group to whom the company belongs) (Identification of the mainfunctionsperformed by the company) 18

  19. THE RISK ANALYSIS PROFILING FOR LBT Activities performed (Tax rulings) (Alerts and otherintelligence) (Previoustaxaudits and assessments) (Tax disputes) (Tax collection) (Tax credits) (Risk elementsconnected to shareholders and to otherrelated parties) (Otherrelevant information) 19

  20. THE RISK ANALYSIS PROFILING FOR LBT Currentyear’s analyses (Analysis of the annual report) (Mainresultsof taxreturnsfiled) (Focus on the risk issuesmentioned by the AnnualStrategy Note) (Other elementsevaluated) (Other pendingissues) 20

  21. THE RISK ANALYSIS PROFILING FOR LBT Risklevel (Level of riskassigned) (Actionsto undertake) (Comments and otherremarks) 21

  22. THE RISK ANALYSIS PROFILING FOR LBT B A Management Profiling C Planning

  23. THE RISK ANALYSIS PROFILING FOR LBT 1 2 3 4 Analysis of risks and outcomes Analysis ofTaxpayers’ profiles Statistical tables Planning and monitoringsupporttables 23

  24. THE RISK ANALYSIS PROFILING FOR LBT 3. Statistical Tables – a) Distribution of RA files by risk level 24

  25. THE RISK ANALYSIS PROFILING FOR LBT 3. Statistical Tables – d) Distribution of risks by kind of tax law violation 25

  26. Questions?

  27. Thanks for your attention

  28. Paolo Valerio Barbantini (Large Business Division - Director) Useoftechnology in dealingwith LBT in Italy - The RiskAnalysisProfiling LARGE BUSINESS COMPLIANCE: the importance of the tax control framework and how technology can help Tax Administrations and large business work together (Istanbul, May 24th, 2013)

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