Taxation and Governance through the Law

Governance through the law includes legal phenomena which are instruments of decision- and policy making. In the field of taxation three different phenomena can be distinguished regarding instruments of decision- and policy making that aim at good governance in the tax area.

In the first place tools have been developed by the Global Forum on Transparency and Exchange of Information aiming at creating a level playing field and preventing a further pressure on states to reduce effective tax rates. The Standard for Good Governance developed by this Forum in 2004 has been accepted by most of the 101 Member States of the Forum.

Furthermoretools have been developed for promoting more transparency towards their stakeholders on the tax obligations of companies, amongst others in Corporate Governance Codes and in annual accounting standards and regulation.

And finally tools have been developed for establishing more efficient procedures for establishing the right amount of tax payable and providing more certainty to taxpayers on the amounts due. An example is the recent enhanced relation of the tax administration of the Netherlands with its taxpayers through “Horizontaal Toezicht”.

It is too early to say whether these tools will achieve their goal.

The working paper 'Taxation and Governance through the Law' can be found here.