What to learn from a failed (?) Swedish tax compliance project
[2017-02-02] Governments and tax agencies want to collect the correct amount of taxes in a timely and efficient manner. But what is the best way for tax agencies to work with large multinational corporations? Can collaboration between tax agencies and corporations increase tax compliance? Researchers from the Horizon2020 FairTax project tries to find out what we can learn from a Swedish tax compliance project that some might call a failure.
In 2011, the Swedish tax agency “Skatteverket” launched a project aiming to increase compliance among the countries largest corporations: “Fördjupad samverkan” (literally meaning “Enhanced collaboration”). The goal of the project was to increase the efficiency of tax collection, reduce the risk of tax errors and increase trust between the parties. By working proactively with large corporations, the tax agency wanted to ensure that information, taxes and fees were to the largest extent correct as early as possible in the taxation process. Today however, the project is almost entirely put on hold. In the recently published report “SWEDEN: Failure of a Cooperative Compliance Project?” research fellow Lotta Björklund Larsen, Linköping University and the FairTax project, tries to understand how the cooperative compliance project worked out in practice among participants and how it affected participants tax compliance. To her surprise, the “Fördjupad samverkan”-project developed into a failure.
Few corporations were interested in participating
Some of the largest multinational companies in Sweden were invited by Skatteverket to participate in “Fördjupad samverkan”. The project launch was followed by a quite hectic and high-pitched media debate, and many arguments against the project, mainly from a legal perspective, were raised. The debate ended when Sweden’s 25 largest corporations in an open letter declared that they did not even wanted to be invited to the project. Today, the project is relaunched as “Fördjupad dialog” (Enhanced dialogue), and only one company is actively participating (although a handful retain an agreement).
“I have followed the project, the media debate surrounding it, and I have also interviewed representatives from both Skatteverket, participating companies and those who declined being invited as well as some other stakeholders. It is a qualitative approach taking all aspects in consideration. My research report describes how Skatteverket proposed an initiative that carried with it international success stories from similar projects, but in the Swedish version and context met with strong resistance and is now put on hold awaiting proposed changes in the law.“ says Lotta Björklund Larsen.
Aspects to consider in future projects
“In the report I suggest eight aspects from the Swedish case that should be taken into consideration for successful implementation of a cooperative tax compliance initiatives. Such initiative has to be in accordance with existing laws. Fair market competition and legal equality has to be ensured. What is problematic in the Swedish case is that any information exchanged between the parties cannot be confidential following the Freedom of the Press Act. Stakeholders’ societal roles cannot be drastically changed. Ways of working have to be explained carefully. The initiative has to be based on relevant competence among both participating tax authority and taxpayer. Clear benefits for both taxpayers and tax administration have to be evident and recognized. Finally such an initiative must be well planned and carefully launched.” Lotta Björklund Larsen continues.
Together with her colleagues in the FairTax project investigating other Northern European countries, Lotta Björklund Larsen will now continue to explore how such initiatives impact tax compliance.
“My report raises several questions that needs to be further investigated, if we should be able to draw any conclusions as to whether cooperative compliance actually increases tax compliance.” Lotta Björklund Larsen concludes.
Follow this link to read full version of the report “SWEDEN: Failure of a Cooperative Compliance Project?”: http://umu.diva-portal.org/smash/get/diva2:1057730/FULLTEXT01.pdf
For more information, please contact Lotta Björklund Larsen: firstname.lastname@example.org
This research is part of the FairTax project. The project is coordinated by Umeå University, Sweden, and is funded by the European Union’s Horizon 2020 research and innovation programme 2014-2018, grant agreement No. FairTax 649439. For more information about the project, go to: www.fair-tax.eu
Editor: Elin Andersson
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