1. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Trends in the modernisation of Tax Administrations Utrecht, 1 July 2005 Victor van Kommer IBFD www.ibfd.org

2. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Items to discuss Main trends Risks in modernization What are the challenges An example: integrity An example: resources Prototypes of organisational culture Cultural differences Organisation in five parts (Mintzberg)

3. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Main trends Large Taxpayer units Strengthening Taxpayer service and public awareness Autonomy/ Agency model Risk assessment Capacity building/HRM and training policy Integrity/internal control/evaluation process Performance management Involvement in tax policy

4. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Risks in modernization 1.National approach (multinationals are global organised) 2.Supply driven Anglo-Saxon methodologies 3.Direct taxation overestimated? 4.Exchange of information / Processes are seldom organised 5.International cooperation more at the managerial level then at the operational level 6.Enlargement of management and supporting processes the organisational disease of this decade?

5. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise What are the challenges? Continuous learning program Management as facilitator International cooperation/ int. audit program More understanding for the economic environment is necessarily Real client management (more in attitude then in name and structure) ICT has to become a supporting process ( ICT was to much a driver) A future role for Tax administrations as the public databank? To abandon control mentality and to think in influence (effectiveness instead of efficiency)

6. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Integrity Corruption is a correction on aberrations in society and organisations Answer is to work on the conditions instead to fight corruption Use corruption cases as learning examples what went wrong, what were the weak spots in the organisation Challenge is to compete with the attractiveness of corruption and to make the process behind it more transparent

7. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Resources In Western Europe many tax administrations are male dominated In Eastern Europe female dominated But both types suffer from a middle age dominance and less attractiveness for younger professionals Expensive, more experienced, innovative? And tremendous training needs in the near future (after retirement of the current generation)

8. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Prototypes of organisational culture (1) Equal Task oriented Person oriented Hierarchy Learning organisation Pyramidal organisation Result driven organisation Family oriented organisation

9. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Prototypes of organisational culture (2) Equal Task oriented Person oriented Hierarchy Scandinavia USA Germany France Southern Europe Latin America

10. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Prototypes of organisational culture (3)

11. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Reaction in stress situation Equal Task oriented Person oriented Hierarchy Power abuse More rules Dream on Targets and sanctions

12. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Cultural differences Low need for structure Mutual adjustment Task prior to relationship Minimum amount of targets and control Strategic planning No news is good news Conflicts not threatening Fulfilment High need for structure Direct supervision and standardisation Relationships before task Group targets with formal control Short term precise planning and strict implementation Boss has to invest much energy to obtain negative feedback Strong conflict avoidance Security and secure career NetherlandsMiddle East

13. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Organisations in five parts (Mintzberg) Operational Core Middle management Techno structureSupport Staff Top management United Kingdom USA France Germany Asia/ Middle East

14. © 2005 IBFDWWW.IBFD.ORG, Your Portal to Cross-Border Tax Expertise Conclusion A global language for tax administrations doesn’t exists