Evaluation of Tax Administration Oversight
Commissioned by the Ministry of Finance, Panteia has conducted an evaluation of the oversight by the Dutch Tax Administration. The study primarily examined the extent to which the Tax Administration’s oversight is effective, efficient, and appropriate.
The researchers identified a “shift towards the front end” in the Tax Administration’s supervisory policy, with a strategy increasingly focused on behavioural influence, compliance, and error prevention. There is greater room for a human-centred approach and tailor-made solutions. Instruments aimed at preventing errors have proven effective and can contribute to compliance. Additionally, the strategy is consistently applied across different target groups and is supported by insights from literature. The study found high levels of tax compliance, trust, and tax morale.
At the same time, several initiatives are still relatively new, and in the future, a larger dataset will provide a clearer picture of the effectiveness of individual oversight instruments on compliance. The researchers also caution against the risks of reduced retrospective oversight due to the increased focus on preventive measures.
The report concludes that the Tax Administration is on the right track but highlights the need for further refinement and improvement. To that end, ten recommendations have been made:
- Broaden the scope of the next evaluation to include oversight and services, potentially distinguishing between target groups or tax instruments.
- Measure compliance deficits annually for private individuals and SMEs.
- Conduct empirical research on the decline in retrospective oversight and its impact on compliance.
- Improve labelling in the time/cost tracking system to better classify oversight activities.
- Establish an acceptable risk level and determine the minimum required capacity for oversight accordingly.
- Explore the possibility of developing KPIs for each oversight instrument.
- Investigate whether and to what extent initiatives on human-centred and tailor-made approaches ensure the appropriateness of oversight.
- Resume oversight on false self-employment.
- Assess whether more evaluations of individual oversight instruments are needed and incorporate the effects on interim objectives and compliance-enhancing factors in evaluations.
- Examine further possibilities for modern tools and Artificial Intelligence (AI), particularly to reduce the time spent by both the Tax Administration and businesses during tax audits.
In the letter to Parliament accompanying the report, the State Secretary for Finance stated that the recommendations will be adopted.
Read the report and the parliamentary letter (both in Dutch) here.
