The amount of tax in relation to the size of a business’ operations can be significant, as can the risks associated with these taxes.
The question that businesses are therefore increasingly asking themselves is: Are we managing the risks associated with our tax positions? And even if businesses don’t ask themselves this question, risk management is something that the Dutch Tax and Customs Administration expects. Especially now given its new approach to audits. To clarify its audit approach, the Dutch Tax and Customs Administration has published a brochure entitled ‘The Audit Approach of the Dutch Tax and Customs Administration’ (Controleaanpak Belastingdienst; CAB). The brochure emphasizes the preference for random statistical sampling not only as a means of verification, but also as a way for organizations to apply a self-monitoring approach. Random samples are not only used for the technical examination of tax issues (for example, payroll tax and social security contributions and VAT), but also to assess the quality of the tax processes and control measures (the Tax Control Framework; TCF). To manage tax risks, control measures need to be developed and implemented. These measures must prevent, detect and correct any departures from tax procedures. The challenge lies in establishing whether these control measures are (or have been) effective.