The Belgian Minister of Finance, Vincent Van Peteghem, has made his first official statements on the ambitions of the new government De Croo I in relation to the SPF/FOD Finance. Minister Van Peteghem, also in charge of the Coordination of the Fight against Fraud, presented his policy note on 4 November 2020 to the Belgian parliament and elaborated on the key pillars of future fiscal policy work. The overarching theme is aiming to achieve a modern and fair fiscal regime. At the same time, the Minister makes it very clear that the focus of the SPF/FOD Finance will be on its core assignments: levy, collection and recovery of taxes.
In this newsalert, we highlight the key soundbites from the policy note regarding the initiatives aimed at revising tax audit approaches as well as the enhancement of relationships with taxpayers.
Tax audit approaches and international cooperation
The policy note of the Minister of Finance specifically refers to measures to discourage tax planning and tax optimisation and equally emphasizes the support for the new OECD and EU initiatives to introduce new tax rules internationally. The note also displays a clear commitment to propose and implement concrete measures to further enforce tax compliance, enabled by a more streamlined organisation. An evolution from investigation of the past to real-time fiscal insights is mentioned, but equal emphasis is put on effective tax audits. Key takeaways include:
- Tax audits should increasingly target non-compliant taxpayers identified based on new and improved data mining techniques and detailed risk profiling. International exchange of information and multilateral cooperation are put forward as essential building blocks to be more effective.
- Increase in knowledge sharing between separate teams and centralisation of expertise involving international tax structures within a dedicated team at the level of the STI (BBI/ISI). PwC has already observed significantly increased activity in this area over the last months (newsflash).
- Systematic integration of e-audits in tax file audits and optimisation of B-SAF (Belgian Standard Audit File) by introducing a standardised format.
- Revisions of the tax procedure rules to be more effective and to arrive at more uniform investigation powers.
- Establishment of a Centre for Specific Matters, charged with amongst others conducting (multilateral simultaneous) tax audits. Auditing taxpayers in a cross-border context is considered a priority. Simultaneous and joint multilateral tax audits for multinational enterprises were already observed in practice and will be further increased.
- Measures to reduce the Belgian VAT Gap to the level of neighbouring countries. The VAT Gap is the difference between the expected VAT revenues and the VAT revenues that are actually collected. This difference is not only caused by revenue losses due to tax fraud or tax evasion but is also a result of bankruptcies, administrative mistakes or malfunctioning tax collection, to name just a few. Hence probability of tax audits will be increased in the field of indirect tax by improving the available tools and processes.
- For customs and excise duties, participation in an increased number of EMPACT projects (European Multidisciplinary Platform Against Criminal Threats) with Europol and OLAF is put forward.
- A proactive approach regarding the adoption of the new EU DAC7 proposal, which concerns amongst others exchange of information on request and automatic exchange of information regarding royalty income and digital platform holders.
- The introduction of a so-called “basket system” in order to spread the workload of tax inspectors over a larger geographical area and lead to the flexible use and increased effectiveness of the available resources at the level of the tax administration.
- Additional anti-fraud measures by the STI and CAF (Coordination Anti-Fraud) in order to reflect the recommendations of the Special Commission regarding Panama Papers and international tax fraud.
- Abolishment of the fiscal amnesty procedure by 2023, and Belgian bank balances will likely be made available to the CPC (Central Point of Contact: a register of bank account numbers and contracts held at financial institutions in Belgium by resident and non-resident natural or legal persons).
Relationship and cooperation with taxpayers
In order to improve the relationship between the tax authorities and taxpayers, the Minister of Finance stated that 2021 will be marked by:
- Efforts towards the expansion of the number of participants in the Co-operative Tax Compliance program for large enterprises (cfr. our earlier newsflash on this topic).
- A vision towards a system of horizontal monitoring for SMEs.
- Achieving increased tax compliance through efficient and uniform tax audit procedures.
- Additional strategic cooperation with the Institute for Tax Advisors and Accountants.
- Reducing administrative costs and simplifying tax legislation to make it more understandable for the general public and organisations.
- Implementing a code of conduct regarding mutual respect and professionalism between tax authorities and taxpayers regarding tax audits (including mutual commitments on the duration of the audit, evolutions of the file, etc.).
Next to that, a number of (digitisation) initiatives are aimed at improving the ‘user experience’:
- Improve online platforms (e.g. MyMinFin): detailed overviews of outstanding tax payments, digital sharing of tax audit reports and of any verbal or written correspondence between the authorities and the taxpayers, and the opportunity to request and consult certain attestations online.
- Facilitate tax collection by supporting digital payments, e.g. via QR codes and by sending payment reminders via SMS.
- Roll-out of eBOX, a centralised platform on which taxpayers can share and receive official documents.
- Provide the “willing but unable to pay” with the opportunity to request a payment plan online.
- Allowing non-governmental stakeholders (such as the Public Centre for Social Welfare or “OCMW/CPAS”) to have access to government databases.
- A “reach-out project”, aimed at engaging with taxpayers who do not have the skills or means to be fully digital.
The Minister also announced an investigation into how the time between income, tax return and final tax assessment can be shortened to reduce uncertainty of financial situation for individual taxpayers. In this context, there is also a plea to review all tax declaration and payment terms for the most important federal taxes in order to help resolve yearly recurring problems that now occur.
The policy note is an official document published by the Minister of Finance and expresses an ambitious plan to modernise, simplify and digitise the Belgian tax administration in order to enhance the relationship with taxpayers.
In order to optimise the timely and correct collection and recovery of taxes, the Minister of Finance does not shy away from expressing a clear intent for upping the level of international cooperation and leveraging on expertise within the administration to perform more targeted audits. The actions fit into broader proposals at EU level to increase administrative cooperation (e.g. via a further extension of the Directive on Administrative Cooperation).
Significant time and resources will be invested in expanding and streamlining the tax enforcement activities. As the intention is to use existing resources more efficiently, it remains unclear whether this will result in an increase in the volume of selected files for audit, a shift in focus and/or more collection of taxes in order to help fix the budgetary challenges. A couple of things clearly glimmer through: audits will go more in depth, there will be an evolution towards real-time audits as opposed to audits of the past, taxpayers should be able to explain their positions, and non-compliance will not be tolerated.
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- Belgian tax reform
- Corporate income tax
- Tax controversy and dispute resolution (TCDR)
- Transfer pricing