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Policy, Tax and Revenue Management

Tax challenges in the digital age

By Amelia Kwok | 4 February 2009

In a profession with such a long history dating back to the ancient Egyptians, the tax sector has seen numerous changes and survived them all, says Rob Delnoij, Regional CRM solution Principal, SAP Asia Pacific & Japan.

Whether in Roman times or during the Middle Ages, taxation has been part and parcel of life, so to say it is facing new challenges now in the digital age is a bold statement indeed.

However, with the world a progressively interconnected and digital one, new challenges are arising for tax official and agencies, who are increasingly required to improve customer service response time, increase revenue collection and maximize compliance and efficiency, all the while identifying and resolving the taxpayer’s needs and improving the satisfaction level of citizens – by no means a small order.

The challenge today

Revenue collection agencies at all levels around the world are trying to capture revenue and at the same time improve taxpayer compliance. While tasked to generate as much revenue as possible in the most cost-effective manner, they also face citizen demands for responsive services and fiscal transparency.

Agencies therefore face a constant balancing act and can be overwhelmed with numerous service programs.

What is needed here is a strategy designed around the citizen that can even provide proactive services and address problems without citizen involvement. The strength of this citizen-centric approach lies in empowering citizens to interact with tax and revenue agencies through different service delivery channels such as the Internet, telephone and fax.

However, to truly provide a citizen-centric service, these channels need to be integrated and agencies need to automate and eliminate redundant processes.

On the technical side, other challenges abound. Investments in IT that lag behind revenue growth result in outdated and inflexible systems based on old technology, requiring extensive costs and maintenance time. In many cases, these legacy systems do not keep pace with the changes required, resulting in limited streamlined channels the taxpayer can access his total record and tax obligation.

Dealing with new challenges

In an increasingly wired world, more and more services are being provided over the Internet. Citizens live in an online world where services are available 24 hours a day, seven days a week and they expect the same access to tax data and to make queries and requests to retrieve or submit information.

Although these converging trends are creating challenges for tax and revenue executives, they also represent significant opportunities.

The fact remains that most citizens want to pay their taxes on a voluntary basis and the majority of all tax revenue collected is paid without any enforcement action. Revenue agencies know it is more effective to assist taxpayers in understanding and fulfilling their tax obligations before they file than to collect delinquent taxes after the fact.

Providing responsive service to constituents while increasing revenue and compliance is therefore not contradictory or mutually exclusive – better service will naturally increases revenue and compliance.

The key then lies in harnessing the power of integrated information technology solutions.

Agencies have been turning to standards-based commercial off-the-shelf solutions to leverage the innovations of the private sector. In addition to being cheaper than custom-designed solutions, they can “future proof” current investments in technology.

Furthermore, these solutions help public service organizations protect the privacy and security of information and consolidate revenue management business functions within an integrated system.

Providing certainty in an uncertain landscape

In such an information-intensive process like tax and revenue management, the boosting of the efficiency of operations is vital and this entails making key services and data available online and reducing the cost of acquiring, storing, processing and accessing data.

From one who has intimate knowledge of the sector, this is where SAP’s Tax & Revenue Management solution truly proves its merit.

The solution provides taxpayers and tax agents with a self-service portal to facilitate secure access to information via the Web anytime, any day, thereby lowering response time from weeks to seconds and dramatically reducing operational costs.

The solution also creates a single view of the taxpayer’s history, which enables agents to easily facilitate transactions and resolve issues. It enables agencies to improve their external and internal services and optimize the technical performance of receivables management and accounting systems.

With multi-channel access to all services and information, agencies enable taxpayers to file and pay taxes, receive payment confirmation and register complaints around the clock, providing a single engine for all tax types.

The solution also automates and optimizes tax processes such as citizen registration, returns processing, accounting and case management, which enable tax and revenue agencies to facilitate faster, more efficient and more accurate processing.

The reduction of human intervention in routine or low-risk decisions eliminates the cost and potential for human-based errors and allows agencies to apply valuable human resources when and where they add the most value.

Additionally, SAP knowledge management tools provide employees with the knowledge they need to properly process requests, create workflow steps and handle constituent cases, leading to enhanced customer service and satisfaction while remaining within budget.

A truly citizen-centric approach

By leveraging a platform that supports one-stop registration, account maintenance and collection capabilities across multiple communication channels, governments ensure complete and up-to-date taxpayer information is captured and filing information validated.

Such a view increases voluntary compliance by simply ensuring people are aware of what they owe.

In providing a configurable and upgradeable commercial, off-the-shelf tax and revenue management solution built upon a flexible and adaptive business process platform, SAP has ultimately enabled governments to increase compliance, improve collections and deliver responsive services to taxpayers in the digital age.

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