Supporting Institutional Reforms in Tax and Customs: Integrating Tax and Customs

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The Netherlands

Pre-merger status

Until 1987, the structure of the Tax and Customs Administration was based on different types of tax. There were separate tax inspectorates for wage tax and income tax, corporate tax, and turnover tax, among others. Moreover, separate processes were employed for assessment, control, and collection. And there were some 260 local offices under eight regional directorates. as well as a number of functional directorates. The consequence was that an individual taxpayer dealt with numerous offices in the Tax and Custom Administration, each with its own approach, forms, and procedures.

The merger

The Dutch Tax and Custom Administration today is integrated at headquarters, regionally, and locally. Between 1987 and 1992, the Tax and Custom Administration went from a means-and process-oriented structure to a target-group and integrated structure.

Classification by target groups was used as the organizing framework. The complex treatment of fiscal matters was taken into account in the target group structure. Another important feature was that the tax types and working processes were integrated in one local office. Within each office separate teams assume responsibility for the fiscal treatment of specific client groups. This means taxpayers only go to one team. The local office also has all relevant data directly available.
The restructuring process involved not only the general structure but also the structure of the business processes to optimize support to taxpayers. This was done by restructuring the following elements:

  • Logistics management, to ensure short processing time and quick action.

  • Data structuring so that data are structured by taxpayer or group of taxpayers.

  • Shifting content process actions from document-oriented to client-oriented.

The Ministry of Finance assumes responsibility for drafting and execution of tax legislation. The Directorate-General for Tax and Customs Policy and Legislation (DGFZ) is responsible for legal drafting, while the Directorate-General for the Tax and Customs Administration (DGBEL) is responsible for implementing tax and non-tax legislation. Different Directorates each deal with specific kinds of taxes, i.e., the Direct Taxes Directorate, the Consumer Taxes Directorate, and the Custom Affairs Directorate. The Tax and Legal Affairs Directorate deals with general legal issues and civil proceedings.

The Tax and Custom Administration, responsible for the actual collection of taxes and duties, is also part of the DGBEL. A number of tasks of this directorate are related to management of the Tax and Customs Administration, including personnel policy and organizational development. Some management tasks are delegated to different divisions and local offices of the Tax and Customs Administration. The Tax and Customs’ Internal Audit Office audits the Tax and Customs Administration, also reporting to DGBEL.

The Tax and Customs Administration has a number of service companies and agencies:

  • The Tax and Customs Computer and Software Center (B/AC) advises the Tax and Customs Administration on automation, and supplies the Administration with automation equipment.

  • The Fiscal Information and Investigation Service (FIOD) has two Divisions. The Information Division supplies local offices and districts of the Tax and Customs Administration as well as the Investigation Division with information required to deal with their clients. The Investigation Division looks into matters concerning taxes and duties.

  • The Tax and Customs Training Center (B/CPO) organizes courses for tax officers. B/CPO also makes recommendations about the organization, and it is charged with recommending suitable candidates for various posts within the Tax and Customs Administration.

perational management is under the direct control of the Administrative Divisions focused on target groups, e.g., private taxpayers. Each division has a number of local offices.

The target groups of taxpayers are:

  • Private Taxpayers

  • Business Taxpayers/North and South

  • Business Taxpayers/Large Companies

  • Customs.

The Divisions, each of whom is responsible for the treatment of a target group, form the middle management tier. The divisions are responsible for the execution of the following main tasks:

  • The development, structuring, and definition (within the framework of the centrally developed strategic policy) of the integrated multi-annual policy for the main processes concerning their target group, and guiding the realization of these processes.

  • Contributing to the strategic processes developed at the central level with regard to support functions, i.e., personnel, organization, finance, and automation

  • Defining additional policy frameworks for their own division, and providing support for development at the unit level, or, for Customs, at the district level;

  • Attending to administrative relations with other national and international organizations in the business sector

Effects of the merger

The Dutch merger focused on organizational restructuring based on target groups to reduce fraud and tax evasion. These aims were meet in the sense that both business processes and management approaches were modified to fit and support the new target group structure. An effect of the target group approach is that revenue collection seems more efficient, as the activity and number of staff remain approximately unchanged while number of hits and success rate has increased.

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