Tax authorities could do more to realise the full potential of new technology to reduce the tax compliance burdens on taxpayers, according to the 2019 edition of the annual Paying Taxes report, produced by PwC and The World Bank Group.
Paying Taxes 2019 draws upon a comparison of the taxation of business in 190 economies. The report models business taxation in each economy using a medium-sized domestic case study company. The report has found that the global average results for the compliance burden for business taxation are almost unchanged across four key measures: time to comply (237 hours); number of payments (23.8); Total Tax and Contribution Rate, or TTCR (40.4%) and Post-Filing index (59.6 out of 100).
Paying Taxes 2019 illustrates how developments in tax software, real time reporting systems and data analytics are transforming the capabilities of tax administration. It also highlights that implementing new technologies for tax compliance can increase the administrative burden, at least in the short term, and that such implementation requires careful planning and consultation.
The report also explores the impact of differing levels of regulation and skills on the enforcement of tax through tax audits. Audits can vary hugely in their duration and complexity – taxpayers can spend up to 128 hours gathering information for an audit, though for many it takes only a few hours. Improving tax officers’ skills is vital if a well-functioning tax system is to be sustained. 97% of economies offer training to tax officers, but, only 35% of economies provide regular training.
According to the results while many economies have made considerable improvements in their tax systems in recent years, the findings also suggest that some economies are finding it difficult to implement online filing and payment due to the lack of IT infrastructure, cultural barriers and complex legislation. Paying Taxes also notes that governments will need to take account of how new technology affects the nature and patterns of employment and profit generation and the consequent impact on the income streams that are available to be taxed.