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  • Feature: Broadening how we measure the impact of our work

    Addressing non-compliance through audits and other ‘correction’ activities will always be an important part of our work. But real success in sustainably reducing the tax gap lies in helping public and multinational businesses (and other taxpayers) to get things right from the start, locking in future compliance after we have made a correction, and efficiently maintaining confidence that the right taxes continue to be paid.

    Accordingly, we are broadening how we measure the impact of our work by adopting OECD better measurement practices.

    One new measure is the ‘wider revenue effects’ of our activities, beyond the direct collections we obtain from audits. Wider revenue effects cover, for example, the amount of current year collections attributed to engagements we have had with clients that prevented them paying a lesser amount of tax, or where we have locked in future compliance through things like advance pricing arrangements. It may also cover situations where we have alerted the community to our concerns about certain tax planning arrangements and this has resulted in our clients steering away from the more concerning aspects of those arrangements.

    Taking a conservative and evidence-based approach, we have estimated that more than $500 million of income tax wider revenue effects was collected in 2016–17 as a result of activities conducted in either 2016–17 or in earlier years. More than $400 million of this resulted from our preventative activities.

    When these wider revenue effects are added to our 2016–17 audit-related income tax collections of $1.7 billion for public and multinational businesses, this brings the total revenue effects of our work in influencing the behaviours of public and multinational businesses to $2.2 billion in 2016–17.

    Using a rigorous and holistic approach, we have also started measuring the amount of tax that we are very confident has been correctly reported in recent income tax returns of public and multinational businesses (see our Justified Trust initiative).

    During the year, and adopting this new approach, we assured $15.9 billion of income tax reported in the 2014–15 returns of 22 large public and multinational businesses. In other words, we have justified trust that the $15.9 billion of taxes is the correct amount payable on the economic activities of those clients. This measured assurance is in addition to our other assurance, prevention and correction work.

    Over the next three years, we will have applied this approach to the largest 1,000 public and multinational businesses, using the additional resources we have been provided under the Tax Avoidance Taskforce. This work will help to improve our confidence, and the community's, that the right taxes are reported and paid by these large entities. It also provides a foundation for a more streamlined and efficient assurance process in the future, for both ourselves and for participating clients.

    End of Broadening how we measure the impact of our work feature


      Last modified: 30 Oct 2017QC 53657