Electronic filing: filing your taxes electronically – opinion

The OECD recently reported that tax administrations around the world are investing significant resources in the development of electronic services and digital solutions to improve their services, reduce burdens and improve tax compliance. This includes electronic filing of tax returns.

The OECD publication “Tax Administration 2021” sets out key performance indicators for 59 tax administrations (including the Israel Tax Authority) of the OECD and other advanced and emerging economies that together collect € 12.3 trillion in annual revenue.

The report highlights a new shift towards digitization and the provision of digital services, something that has proven important for tax administrations during the COVID-19 crisis, as governments introduced thousands of emergency tax measures.

“Efforts by tax administrations to move more of their processes online have not only improved service delivery, reduced burdens and improved compliance, but have also made us more resilient,” said Bob Hamilton, President of the Forum of OECD Tax Administration and Commissioner of the Canada Revenue Agency.

According to the OECD, electronic filing of tax returns and electronic transfer of payments are becoming the norm, with more than 9 out of 10 business taxpayers filing their returns electronically in 2019. For income tax filers of companies natural persons, this figure exceeded 80%.

MasterCard and VISA credit cards are seen in this illustration from image taken on June 9, 2016 (Credit: MAXIM ZMEYEV / REUTERS)

“With more than 1.1 billion contacts through online taxpayer accounts in 2019, we can clearly see the impact that the growing electronic tax administration is having on the efficiency and effectiveness of tax administrations globally and their interactions with taxpayers. taxpayers, ”said Pascal Saint-Amans. , Director of the OECD Center for Tax Policy and Administration.

The report also shows that tax administrations are increasingly using large, integrated data sets, with more than 80% using analytical tools and techniques to improve risk management and aid in compliant design.

Artificial intelligence and machine learning are increasingly supporting tax administration processes and services, and nearly 75% of tax administrations report using state-of-the-art techniques to exploit data in ways that free up administration resources tributary to deploy them in other areas.

These technologies also allow tax administrations to run services almost 24 hours a day, 7 days a week, often driven by the use of digital assistants such as chatbots, tools that are already used by around 50% of the administrations covered in the report.

Israel according to the OECD:

The OECD report cites two examples from Israel related to VAT on tourism.

First, VAT refunds for tourists. The previous refund process for tourists required the manual filling of forms in the business and additional verifications performed at the departure stage (including filling and data entry of all purchase data manually) which sometimes caused congestion at the airport and the denial of refunds due to errors. Now, the system allows a smart cash register in the company to connect to the Tax Authority’s web service and send the details of the transaction. Inspection time and reimbursement payment have been reduced from an average of approximately 9 minutes to less than a minute. There was also a 99% decrease in errors.

Second, zero VAT on hotel accommodation services. Tourists pay zero-rate VAT on various services consumed in Israel, such as hotel accommodation services, car rentals, and more. For example, hotels can now enter transaction details (including passport number and country of origin) and receive an indication as to whether the tourist is entitled to a zero VAT rate.

Our comments:

On the income tax side, there is room for improvement in Israel. The Israel Tax Authority (ITA) online tax system is known as “Shaam” (Hebrew initials for Data Processing Service) and is a strange mix of DOS (green letter on black background) and Windows.

Electronic filing of tax returns became necessary due to COVID-19, mainly for businesses. It is still difficult to register and file electronically for non-business taxpayers, such as private investors, retirees, and trusts.

Accountants rarely receive copies of correspondence sent to contributing clients. Accountants must monitor which clients have been fined and find out why. Two-way communication is limited. Instead, the accountant asks a question and typically receives a “referred for treatment” response, requiring further follow-up.

Data security and encryption procedures are strict, a higher priority in Israel than in the OECD.

Tax can be paid online with a credit card if the amount is up to NIS 35,000; otherwise, other procedures are generally required.

If real estate is sold, the income tax system does not interact well with the land tax system.

What sometimes works too effectively is the electronic freezing of bank accounts if taxes are not paid, even if the relevant tax claim is still in the mail.

As always, consult experienced tax advisers in each country at an early stage in specific cases.

[email protected]

The writer is a certified public accountant and tax specialist with Harris Horoviz Consulting & Tax Ltd.


Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *