5 Q’s for Frans Hietbrink, Strategic Advisor at the Netherlands Tax and Customs Administration
The Center for Data Innovation spoke with Frans Hietbrink, strategic advisor at the Netherlands Tax and Customs Administration. Hietbrink spoke about the differences between the United States and the Netherlands when it comes to financial reporting and what he hopes for the future of the Netherlands’ use of machine-readable data formats.
This interview has been edited.
Travis Korte: At a high level, can you describe your work with the Netherlands Tax Administration?
Frans Hietbrink: Within the Netherlands Tax Administration, I am the senior advisor for strategic management regarding the digital interaction between tax consultants and the Tax Administration (NTA) using international standards. I coordinate projects within the NTA responsible for improving this digital interaction. I support the director-general of the NTA, who is also the chairman of the Standard Business Reporting (SBR) Council, in coördinating the activities from the NTA, the Chambers of Commerce, and the Central Bureau of Statistics and Logius (a shared service organisation). I act as liaison to private parties like software developers and tax consultants, and I represent the NTA and SBR Council in international meetings.
Korte: Can you briefly compare and contrast the problems the U.S. is facing regarding financial reporting with the ones the Netherlands is facing? Where has one country been successful where the other has failed?
Hietbrink: As financial reporting has many aspects it is difficult to make this comparison a brief one. During my visits to Washington we compared the Dutch SBR chain to the information chain covered by the Digital Accountability and Transparency (DATA) Act of 2014, and to the financial reporting by large entities to the Securities and Exchange Commission. SBR currently focuses on enterprises in the Netherlands, mostly small and medium in size, that have to file regulatory information with the Chamber of Commerce and the NTA. We focus on data standardization (definitions, syntax, names), processes (filing, validation, authorization) and technique (XBRL formats, web services).
Within our SBR program we rely heavily upon every group of stakeholders—policymakers, government institutions that use financial data, banks that rely on this data, private sector companies, and intermediary parties like tax consultants and CPAs—to work together on a strategic level. Sometimes this happens through umbrella organisations and sometimes it happens at an operational level, with project teams from government and innovative companies.
We also developed data standards by first integrating international standards for country codes and currency codes. Then we look at Dutch data standards concerning addresses, persons, companies. We will use our own standards only if there are no existing national or international definitions. I see possibilities for the U.S. government to work with the international community to develop modern international standards. This would be preferable to a course of action in which the government would be looking to the data definitions which are presently being used by the existing computer systems.
Korte: What will the Netherlands of the future look like with better financial reporting and XBRL use?
Hietbrink: Goal number one is improving transparency. A large company can be made more transparent in principle, but the extensive use of taxonomies might reduce actual transparency [in that the ability to understand this data might be limited]. We try to reduce that risk by restricting the ability to make these extended taxonomies. The transparency of an industry will improve when all the small and medium enterprises use the same data standards.
Goal number two is making the reporting system more flexible. Standards for tax and accounting will be implemented to increase the interoperability of financial data, and as a result the costs for additional reporting or changes in reporting will be reduced.
Korte: What are some of the lessons you took away from the Data Transparency 2014 conference, that focused on the implementation of the DATA Act?
Hietbrink: The most important lesson concerns the involvement of the highest echelon from the beginning. Think big, act small.
Korte: You’re also finishing up a book that’s relevant to this issue. Can you describe it and some of your goals with it?
Hietbrink: Standard Business Reporting is a proven solution for system-to-system information exchange and processing. Various specialists from a range of knowledge areas have contributed to this solution. There are a few reasons for disseminating the acquired knowledge using an open access book.
First, for the parties involved–the insiders–it is important that the lessons learned and the tacit knowledge of the involved specialists be captured in a book. This book should provide an overview, as well as detailed descriptions of the building blocks of the SBR solution. Looking ahead, this book should further streamline communication and cooperation between specialists by providing clear definitions and detailed descriptions of the relevant concepts, methods and relations.
Second, it is important for the outsiders–other parties who might be interested in using SBR in other domains or information chains–to have an overview and a proper picture of the SBR building blocks, as well as an understanding of the conditions for a positive business case when they intend to employ parts of the SBR solution in an information chain.
Third, the knowledge captured is useful for educational purposes. Although there are already numerous textbooks on the various relevant disciplines such as IT, law, change management, governance, and service management, few books provide interdisciplinary accounts on the challenges and solutions in information chains. For those academic programs looking for interdisciplinary course material, this book may be a good starting point.
Finally, it is vital for the academic community to continuously evaluate and define the most pressing research questions and underexplored fields of study. We gratefully made use of the existing literature when writing this book. In doing so, we concluded that previous work has not yet covered some of the relevant concepts and their relations integrally. The final sections of various chapters in this book discuss a number of possible avenues for further research.