As an entrepreneur or institution, you are eager to be in control in a variety of areas, from the realization of your objectives to your tax processes. The latter is important not only to your business or institution, but also to the tax authorities. But how do you demonstrate to the tax authorities that you have your tax affairs in order? Random statistical sampling is of invaluable assistance in this matter.
Being in fiscal control, according to the Tax authorities
Tax authorities oversee organizations. The form and intensity of this oversight depends on the extent to which a company is in control of its tax affairs. But how do the tax authorities determine this? In order to do so, they need insight into the establishment, existence and functioning of an organization’s internal tax control measures. On that basis, it determines what kind of supervision an organization is to receive.
Tax authorities random statistical sampling
As part of its oversight, tax authorities carry out random statistical sampling. What do the tax authorities use such random statistical sampling for?
Tax authorities often use statistical sampling to gain insight into large volumes of data by drawing a set of observations from a random sample of population distributions. Firstly, for the purpose of tax-technical inspections. This might involve e.g. wage taxes and VAT. In this way, the tax authorities check, for example, whether your VAT returns add up. Secondly, the tax authorities use random statistical sampling in evaluating the quality of tax processes and control measures. This is also known as the Tax Control Framework.
Implementation of random statistical sampling
You don’t need to wait until the tax authorities carry out random statistical sampling for your company. You can also do it yourself. In this way, you can make the functioning of tax processes transparent and test them, fast and effectively. Moreover, you can ensure your tax returns are deemed acceptable. This is also known as Tax Assurance.
It is tax authorities policy that its its supervision depends on measures - in this case random statistical sampling - which you yourself have to carry out, or have carried out on your behalf by a third party. The main advantage of doing it yourself (or having a third party do it on your behalf) is that you take the initiative, thereby maintaining control.
Our statistical sampling specialists are familiar with the approach used by the Dutch tax authorities and can assist you with an audit or with using statistical sampling as an internal control as part of your tax control framework.
If you would like to know more about statistical sampling or if you have questions of a more general nature, please contact our specialists. They will be pleased to provide you with further information or advice.