Tax Administration Automation: Hassle of the taxpayer
Deloitte & Touche is the Deloitte Touche Tohmatsu Limited (DTTL)…
The impact of advances in information and communication technology in sectors such as transportation, communication, entertainment, education, banking, health care, etc., is undeniable. Cartoonists and sensational writers have given people several odd philosophies and ideas of what automation means. However, automaton is simply the process of using technology to perform everyday processes or procedures such that minimum human assistance is required and increased reliability and efficiency is attained. The benefits of yielding to automation, leveraging ever-small innovative tools and efficient applications far outweigh the complications. We are indeed in a privileged era where technology keeps simplifying grim tasks or making near ‘impossible’ assignments possible.
Tax administration is not excluded from the automation trend as many advanced countries have recorded significant benefits in tax collection by automation and leveraging appropriate applications to identify taxpayers, obtain financial information and ensure taxes are remitted to the appropriate treasury. This has led to increase in the level of tax compliance and ultimately tax collection. All of these they achieve through adopting various electronic and digitized tax processes and systems.
Developing countries, such as Nigeria, usually encounter challenges with the implementation of electronic tax systems. The most significant challenges are the absence of adequate information technology (IT) support infrastructure and difficulty in ensuring adequate taxpayer education and familiarity with the system. Where taxpayers have limited internet access, low network speeds, power shortages and system failures, the electronic system can be quite slow and unreliable, thereby leading to limited acceptance by taxpayers. In Kenya, for example, the online filing system was introduced in 2009, but it took three years for the system to gain acceptance with taxpayers due to initial challenges with the processing speed of the filing website.
The Integrated Tax Administration System (ITAS) is an initiative introduced by the Federal Inland Revenue Service (FIRS) targeted at automating all core tax administration processes from registration, filing, audit, to payment by both individual and corporate taxpayers. The most visible example of the ITAS initiative is the e-filing portal and the e-TCC portal. The e-filing portal is a platform for filing various tax returns with FIRS such as annual corporate income tax returns and monthly value added tax returns. The e-TCC portal on the other hand is the medium for making application for annual tax clearance certificate (TCC) with the FIRS. It also serves as database from which taxpayers can download tax receipts and withholding tax credit notes.
The e-filing and e-TCC portal have come to stay as FIRS no longer accepts manual filing of tax returns and this is a good development. However, taxpayers experience difficulty in filing tax returns via these online portals and this is majorly as a result of downtime. Where this is the case, FIRS accepts manual filing of such returns which could not be filed online.
The ITAS is completely in line with the basic principles of taxation – convenience, simplicity, transparency and efficiency. If Nigeria can overcome the hurdles associated with implementing an efficient and reliable tax system, then the tax compliance system will be made easier.