In focus Co-operative compliance programmes
Business transactions can be complex and how tax laws apply to them can sometimes be unclear. Through co-operative compliance programmes, businesses and tax authorities are able engage in open and constructive dialogue to discuss matters, such as tax strategy, risks and control frameworks. For this to be effective, companies need efficient tax processes and controls.
Co-operative compliance requires companies to be transparent and voluntarily and pro-actively share matters that may have tax implications with the authorities. For this to be effective, companies need efficient tax processes and controls. Ultimately, co-operative compliance programmes seek to ensure that the right amounts of tax are paid at the right time.
Clarity about business transactions and potential tax implication significantly reduces tax risks and allows for a more efficient allocation of compliance costs. It can also reduce the administrative burden for tax authorities and businesses. Shell favours co-operative compliance programmes as a means to engage with tax authorities.
Co-operative compliance can cover all types of taxes, including corporate income tax, indirect taxes and employment taxes.
We contributed to the development and implementation of the Netherlands’ co-operative compliance programme, which was introduced in 2005. In 2021, we also supported the development of the new VNO-NCW Tax Governance Code in the Netherlands, which was introduced in May 2022 and which sets out the rules and principles that taxpayers should follow if they want to be transparent and compliant. See transparency initiatives.
Shell has co-operative compliance arrangements in place with the tax authorities in the UK, the Netherlands, Singapore, Italy and Austria. We continue to explore possibilities for establishing more co-operative compliance relationships in other countries. In 2021, we were invited by Brazil’s tax authorities to help them design their co-operative compliance programme framework.
