The million-dollar question is, how can technology and automation be used to transform manual and time intensive taxation processes while complying with local and international tax obligations?Managing the number of tax obligations effectively in an increasingly digitalised global economy, while maintaining a similar resource level and budget , is becoming a conundrum for businesses that operate globally or even regionally. It is also a challenge for the tax authorities.
Unfortunately, most corporates have found that there is no easy fix, and tax technology projects cannot be implemented by merely installing new software. In a recent publication, Tax Administration 3.0, the Organisation for Economic Cooperation and Development discussed the digital transformation of tax administrations as comprising three core building blocks of enablers to allow seamless integration between the systems of tax authorities and taxpayers.
Despite the inevitable differences in national approaches, a global review of tax digitalisation practices highlights several similarities:Rather than waiting for taxpayers to submit tax returns after the taxing event, tax authorities are looking to consider ways to support tax assessment in real-time or near-real-time by directly connecting with the taxpayers’ systems.
E-invoicing allows tax authorities to keep real-time information on taxpayers at a transaction level and is central to allowing compliance to be moved upstream. In Malaysia, the IRB is currently working on an e-invoicing initiative together with other regulatory authorities as part of a broader initiative to digitalise the country’s processes in order to gain efficiencies and move up the value chain.
> We are seeing heavy collaboration among national tax authorities, coordinated by the OECD as a new phase of work