Integrating information technology into taxation
BIR has been the focus of several headlines over the past two weeks, but sadly, not for the best reasons. From the Megaworld Task Force fiasco to the missed collection goal, the BIR is desperate for a lasting victory.
This victory could come up against its new incoming commissioner, Lilia Guillermo. A former Deputy Commissioner and current Deputy Governor of the Bangko Sentral ng Pilipinas, her experience in taxation and information technology could breathe new life into the BIR. But what exactly can information technology do to advance the cause of taxation?
The increasing reliance on digital data processing and the use of virtual means to fill gaps in traditional tax audits is common, if not unavoidable, in other tax jurisdictions. The impressive use of information technology has enabled these foreign tax jurisdictions to not only improve revenue collection, but also improve taxpayer compliance and cooperation.
In several jurisdictions, tax authorities have implemented risk-based electronic data processing to facilitate taxpayer compliance and auditing.
In Chile, the tax authorities provide taxpayers with a computer system in which they can carry out their tax compliance operations (from the creation of a business to its closure). An online portal is also made available to taxpayers, which gives them a personalized view of their respective tax obligations, such as tax declarations. This allows taxpayers, as well as tax officials, to instantly monitor and review tax compliance. Online inquiries have been overwhelmingly positive, showing the clear impact the system is having on taxpayer compliance.
Not to be outdone, the Dutch tax authorities are pushing data processing to new heights by applying a risk-based approach in the analysis of tax returns and sending “pro-memoria” letters to taxpayers who most likely made potential errors or misconduct. in their tax returns. As a strong positive response, approximately 70-75% of notified taxpayers voluntarily amended their respective tax returns.
In addition to data processing, the BIR can also make remote communication tools a standard when it comes to interacting with taxpayers. This would require the development of innovative IT solutions.
In Chile, Georgia, Hungary, Peru and Spain, to name a few, various remote inspection and electronic audit platforms have been developed to reduce or even eliminate face-to-face meetings. face to face. This has resulted in improved and efficient audit quality by reducing the time required to perform the audit, the use of fewer resources to provide the necessary documentation and the complete digitization of files and communication, among others. .
To go further, India has set up the “Faceless Scheme” which covers assessments, appeals and penalty calculations. Under this program, a centralized body facilitates all assessments, appeals and penalty calculations by assigning them to regional centers via an automatic assignment system. It favored dynamic jurisdiction over traditional fixed jurisdiction by relying on electronic means of communication. This paved the way for optimal use of resources leading to increased efficiency, transparency and accountability.
The BIR, to its credit, had adopted electronic means in some of its services. The eFPS and eBIRForms facilities enabled taxpayers to digitize their tax returns and enabled the electronic payment of taxes. Electronic invoicing has also enabled instant transaction reporting. But compared to other tax jurisdictions, more can be done. And more should be done.
For starters, BIR can make more of its services and processes available digitally. Tax services such as requesting TINs, updating registration information or submitting documents, among others, can be done through a dedicated online portal for the convenience of taxpayers. Specialized systems designed to improve efficiency can be customized to manage the digitalization of internal BIR processes, such as approvals and movement of documents and records of an office, district or region to another.
With expanding telecommunication facilities in the Philippines, BIR is expected to ride the wave of technological advancement and embrace the digital march of progress. It will be hard and the investment will be substantial. Dynamic and innovative measures should be taken. But for BIR to achieve meaningful and lasting gains, it takes nothing less.
The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a member firm of WTS Global.
The article is provided for general information only and is not intended, nor should it be construed, as a substitute for tax, legal or financial advice on any specific subject. The applicability of this article to any actual or particular tax or legal matter should therefore be supported by professional study or advice. If you have any comments or questions regarding the article, you can email the author at [email protected] or call 8403-2001 ext 380.