Electronic filing: Filing your taxes electronically – notice


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

The OECD publication “Tax Administration 2021” presents key performance indicators for 59 tax administrations (including the Israel Tax Administration) in the OECD and other advanced and emerging economies which collectively collect USD 12.3 trillion. euros in revenue per year.

Report highlights a new shift towards digitization and digital service delivery, which has proven to be important for tax administrations during the COVID-19 crisis as governments introduced thousands of emergency tax measures .

“Tax administrations’ efforts to move more of their processes online have not only improved service delivery, reduced burdens and improved compliance, but it has also made us more resilient,” said Bob Hamilton, Chair of the Forum. OECD on Tax Administration and Commissioner of the Canada Revenue Agency.

Electronic filing of income tax returns and electronic transfer of payments are becoming the norm, according to the OECD, with more than 9 in 10 business taxpayers filing their returns electronically in 2019. individuals, this figure exceeded 80%.

MasterCard and VISA credit cards can be seen in this photo illustration taken on June 9, 2016 (Credit: MAXIM ZMEYEV / REUTERS)

“With over 1.1 billion contacts through online taxpayer accounts in 2019, we can clearly see the impact that growing e-tax administration is having on the efficiency and effectiveness of tax administrations in the world and their interactions with 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 and integrated data sets, with more than 80% using analytical tools and techniques to improve risk management and help design compliance.

Artificial intelligence and machine learning increasingly support tax administration processes and services, with nearly 75% of tax administrations reporting the use of advanced techniques to mine data in ways that liberate resources from the tax administration to be deployed in other areas.

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

Israel according to the OECD:

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

First, VAT refunds for tourists. The previous reimbursement process for tourists required the manual filling of forms in the company and additional checks carried out at the departure stage (including the filling and manual data entry of all purchase data), which caused sometimes traffic jams at the airport and refund refusals due to errors. Now, the system allows a company’s smart cash register to connect to the tax administration’s web service and send the transaction details. Inspection time and refund payment have been reduced from an average of about 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 rental, etc. 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 zero-rate VAT.

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 clunky mix of DOS (green print on black background) and Windows .

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

Accountants rarely receive copies of correspondence sent to taxpaying clients. Accountants need to monitor which clients have been fined and understand why. Two-way communication is limited. Instead, the accountant asks a question and usually gets a “referred for processing” response, which requires further follow-up.

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

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

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

What sometimes works too effectively is the electronic freezing of bank accounts if tax is not paid, even though the corresponding tax claim is still pending.

As always, consult upfront with experienced tax advisers in each country in specific cases.

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The author is a Chartered Accountant and Tax Expert at Harris Horoviz Consulting & Tax Ltd.

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