Soft Law and Taxation: The Case of the Netherlands

Abstract

Law-making by way of administrative rules and horizontal supervision are two forms of new governance in Dutch tax law. Both forms of soft law show the tax administration's shift away from the traditional deterrence approach to a compliance strategy with a focus on more responsive and cooperative regulation. This change of attitude is mirrored by a certain shift in the multinational corporations' attitude towards taxes: they are moving away from aggressive tax planning towards tax risk management and certainty. The legitimacy of the tax administration is enhanced by the introduction of soft enforcement by way of horizontal supervision. Thus, the relations between the tax administration and taxpayers are put on a more equal footing. Important values and principles are procedural justice, mutual trust, reciprocity and good communication. Institutional checks and balances and accountability, transparency, and publicity should guarantee impartial administrative regulation and enforcement and prevent the granting of privileges and abuse of power.

Keywords: Taxation, soft law, new governance, corporate governance, legitimacy, responsive regulation, reciprocity, transparency, checks and balances, compliance, administrative rule-making, participation, risk management, legal certainty, horizontal supervision, enforcement covenants