The digitalization of the Tax Administrations: An analysis of teleworking within the scenario of coronavirus forced restrictions.

Alfredo CollosaAlfredo Collosa    09 May 2020
The digitalization of the Tax Administrations: An analysis of teleworking within the scenario of coronavirus forced restrictions.

We currently see the public as well a private sector attempting to digitalize themselves quickly, in view of the isolation measures decreed by a significant number of countries vis—vis the coronavirus world pandemic.

We are faced with a reckless race for urgently digitalizing all their processes and thus be able to continue providing services or selling goods.

Therefore, I deem it very significant, as I have been doing in different posts to highlight the importance of digitalizing the Tax Administrations  (TAs) that are faced with a great challenge, but also a great opportunity for definitely advancing toward the digitalization of all its procedures.

This digitalization should be included in the rendering of services as an integral part of the digital government concept.

The Digital Government is characterized by the digitalization of public services, the extensive use of public and personal data, the introduction of algorithms to automate the processes and encouragement for developing Artificial Intelligence applications to automate the public sector functions and activities.

As has already been said[1] digitalizing governments is a challenge. Those that have adapted themselves better to the Internet were also share certain characteristics. What is most important is that they created small and multidisciplinary digital equipment, placed them at the core of public service and allowed the freedom to work in new ways. These equipment were focused on providing solutions to satisfy the users’ needs.

Some of the advantages for the TAs of digitalizing their structures as well as their functions are:

Working with digital files, with electronic signatures and electronic notifications, instead of paper files which one should tend toward their reduction.

Allowing the teleworking or home office[2]

Considering the new forms of taxpayer information and assistance (attention through the web of the TAS or through mobile applications) wherein the trend is toward the reduction of physical contacts with the taxpayers.
Using the huge amount of information available in the TAs not only internally, but externally as well, as a result of the increasing forms of cooperation / collaboration resulting from, among other things, information exchanges and all that related to the OECD’s BEPS Action plan.

Implementing such concepts as compliance risk management (CRM) [3] whenever possible, trying to intervene in earlier stages, and not after the tax returns have been filed with which massive controls will prevail over the intensive ones. Likewise, offering pre-filled tax returns is very important in this respect[4].

Promoting collaboration and integration between different public entities and the TA of a same state, as well as between different countries through such processes as one-stop shop.

Counting on information systems to render control more efficient, since definitely, currently the work of the TAs is to administer information and for this reason I wish to highlight the great importance of counting on information systems for carrying out massive and intensive controls.

Improving the quality of information since, as I always say, it is not only a matter of capturing much information, but rather what is important is to work strongly on its quality and to analyze and use it in an effective manner.
Within these issues, it should be pointed out that recently, the governments of the entire world, as a result of the coronavirus are approving temporary organizational measures for the State employees, one of them being teleworking.

Teleworking has multiple benefits for the worker as well as for the TAs. Outstanding among them are greater autonomy, flexibility and mobility, reconciling work with family life, reduction of stress, less travel with the resulting reduction of pollution in large cities, savings in office costs among others.

It will be very interesting to see the impact of teleworking on the productivity of the staff, especially after overcoming the initial difficulties of connection, capacity of the corporate computerized systems to support the great level of accesses, adaptation of the staff to the new way of working, etc.

I understand that in the future it should be posed as a specific option in some sectors of the TAs or for a specific group of taxpayers, regardless of continuing with the face-to-face work.

In my opinion, teleworking in the TAs should be extended once the crisis has been overcome, although complemented with face-to-face work to ensure coordination, the personal relationships between the teams and the sense of belonging. Some tax administrations of CIAT member countries already have said modality as an option for some positions. It should be noted that in those cases, the required levels of productivity of those persons are greater than for those who carry out said activities in the administration’s offices.

Currently, TAs are urgently seeking to digitalize themselves and arrive at what is known as electronic Administration[5], which implies different coordinated elements: technology, rules and management models.

But all of this has significant results, since among the main advantages of electronic Administration one may mention as possible ones:

  • Greater transparency.
  • Lower costs and greater revenues.
  • Increased efficiency and effectiveness.
  • Struggle against corruption.
  • Electronic cooperation with other TAs.
  • Interoperation (capacity for exchanging information and using it)
  • One-stop shop..

I wish to point out that one of the great advantages of betting on the digitalization of the TAs is that it promotes transparency, which is key in the struggle against corruption.

The OECD and many other Organizations and countries are firmly working on the issue of electronic government and have issued, among other documents, a recommendation[6] whose objective is to support the development and implementation of digital government strategies that bring governments close to the citizens and businesses.

Therein, it is recognized that the current technology is not only a strategic promoter for improving the efficiency of the public sector, but it may also support the effectiveness of the policies and create more open, transparent, innovative, participative and reliable governments.

After presenting the possible advantages of digitalization, I would like to stop and consider the difficulties being currently experienced by the TAs, as a result of the coronavirus and the urgent implementation without due planning of teleworking.

In this respect, I am convinced that the more advanced the process of digitalization of a TA, the less the inconveniences that must be faced.

A common problem in many countries is to digitize and train the taxpayers as well as the TA officials in the use of the new ICTs, especially in generations not yet familiarized with digitization.

It is not a simple task and much less when it has had to be accelerated as in the current circumstances.

From the standpoint of TA workers, one may list, among others, the following problems arising from the coronavirus pandemic and the need for teleworking:

Difficulty for all workers to count from their homes with the remote accesses they have in the TA offices.[7]
Not counting on all files, guides or models they have available in their office computers.

Not counting on documents that are in their offices for continuing with their tasks at home.

Not having available in their homes, bibliography and written consultation material which is available in the offices.

Not having in their homes, the necessary computers or computerized resources for teleworking.

Not being able to register for purposes of management control all tasks carried out from their homes.

Not being able to sign administrative acts in digital form from their homes.

From the standpoint of the taxpayers, in addition to the issue of the great financial and economic difficulties for facing their tax obligations, if we consider the relationships with the TAs, there are, among others, the following difficulties:

Presenting procedures in a digital manner, since not all are stipulated in the regulations.[8]

Responding in a digital manner to requests that were made on paper.
Communicating with the offices if they are closed. That is, which alternate communication channels are available.

Inability to file appeals or reviews in a digital manner, if it is not provided in the regulations.

Make payments of specific obligations whose electronic payment is not provided.

For specific groups, electronic communication with the TAs is still an important problem, for which reason the TAs must set up assistance channels so as not to oblige those groups (in general, the most disadvantaged ones) to incur in additional costs by having to resort to private professionals.

As final ideas, I consider that digitalization is key today, more than ever in the TAs and through it, they latter should be in better conditions for improving their efficiency and effectiveness in the struggle against fraud, providing better services to the citizens, reducing the compliance costs, promoting transparency (against corruption) and always respecting the taxpayers’ rights.

We are currently in a historic moment in the stage of digitalization of the public and private sectors. It has been obligatorily accelerated as a result of the coronavirus pandemic.

On the one hand, those TAs that are more digitized are being able to more rapidly carrying out their functions and more efficiently complying with their task.

On the other, those TAs that are not yet digitalized, although they are day-by- day trying to overcome their difficulties, I understand that they will learn the lesson of how important it is to bet on digitalization.

The future will surely find us all more digitized and perhaps this is one of the positive lessons we will have learned following the pandemic.

Probably I may have omitted many aspects, for which reason I invite you to give your opinion so that together we may learn about the subject under discussion.

NOTE OF THANKS: The author would like to thank and highlight FERNADO DÍAZ YUBERO for his very valuable collaboration in reviewing this article, suggesting changes and additions to the original writing.

[1] https://blogs.iadb.org/administracion-publica/es/como-digitalizar-gobiernos-y-mantenerlos-digitales/
[2] Telework is work done remotely using ICTs to sell products or provide services to the world. Among the ICTs needed for these tasks are basically PC, Internet, cell phone, telephone and digital camera, among others. Within the Internet, this mainly includes web browsing and e-mail. And, depending on the case, blogs, websites, translation software, instant messaging (chat) and IP telephony (voIP).
[3] For more information, see Compliance Risk Management (CRM). Fashion or Necessity for Tax Administrations? Fernando Diaz Yubero – Alfredo Collosa CIAT BLOG 19/03/2020.
[4] For more information on pre-filled affidavits, see https://www.ciat.org/Biblioteca/DocumentosdeTrabajo/2019/DT_02_2019.pdf
[5] The concept of e-Government as defined by the European Commission implies “The use of ICTs in Public Administrations, combining organisational changes and new skills, in order to improve public services and democratic processes and to strengthen support for public policies”.
[6] http://www.oecd.org/gov/digital-government/recommendation-on-digital-government-strategies.htm
[7] In the first week of the application of teleworking in the Spanish Tax Agency, more than 20,000 civil servants have been connected to the corporate computer system from their homes, simultaneously and without problems of accessibility or system response time.
[8] As an example, the DGI of Uruguay managed, in view of this urgency, to make all procedures digital. There are no longer any formalities that have to be carried out in person at the Uruguayan administration, which means that in one week we can achieve what had not been possible in a long time.

Similarly, on Friday, March 27, the SII of Chile announced that it is enabling a web application for Activity Verification from its website: Documents can be submitted online that previously had to be delivered only to offices. The measure facilitates tax compliance and prevents the spread of coronavirus. The AFIP of Argentina also incorporated 32 new digital procedures on a mandatory basis to the existing ones.

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You can access Law including Guidelines, Cabinet & FTA Decisions, Public Clarifications, Forms, Business Bulletins for all taxes (Vat , Excise, Customs, Corporate Tax, Transfer Pricing)  for all GCC Countries in the Law Section of GCC FinTax. 

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