Cooperative compliance, tax control frameworks and perceived certainty about the tax position in large organisations

In recent years, a growing number of tax authorities have shifted their strategies towards largeorganisations to include forms of so-called cooperative compliance programmes (OECD,2013). These programmes require large organisations to have internal (or tax) controlframeworks in place that assure that they can comply with their tax obligations and can alsodetect uncertain tax positions and disclose these to the tax authority. In exchange, the taxauthority sees to it that tax matters are resolved quickly, quietly, fairly and with finality (OECD,2007). Cooperative compliance programmes have therefore been characterised as“transparency in exchange for certainty” (OECD, 2013, p. 28).In this paper, we discuss two studies which examine whether the need for certainty about taxmatters is indeed an important driver behind large organisations developing and implementingtax control frameworks, and whether having a tax control framework of higher quality in placeincreases perceived certainty about the tax position. Both Study I (n=669) and Study II (n=271)use data from a (web) survey of representatives of large organisations in the Netherlands. Theresults show that the need for certainty and the importance attached to tax compliance havepositive effects on the quality of an internal tax control framework. Moreover, both studies findthe quality of a tax control framework has a positive effect on perceived certainty about the taxposition. These positive associations indicate that large organisations’ need for certainty abouttheir tax positions stimulates them to improve their tax control frameworks in order to acquiresuch certainty.