And not for dancing

When Socorro Velasquez, our Director of Planning invited me to speak on the computerization of tax administrations today, he also said that I would have only ten minutes. I remembered Ruben Blades and his “song of the end of the world”. In the introduction to that topic in his live album “Live!”, the singer asked us to ask ourselves what we would like to do if we only had a few minutes left.

The challenge I faced was not easy, not by some tragic moment to materialize one of the many prophecies regarding the song or the 2012 which we live, but because the tax authorities now use and can use technologies in many, perhaps in all, processes? How to limit a huge potential source to only ten minutes?

On one hand, the administrations have taken pains to build capacity for increasing the amount of information obtained; the risk management supported with specific tools is incorporated; business intelligence is becoming part of the different processes, and not exclusively in the control cases selection; the need and willingness to cooperate with other tax administrations, sub-national from the same country and nationals of other countries increases, as well as with other government organizations; and the amount of services provided by the administration to facilitate compliance grows, focusing on channels aimed to self-attendance. On the other hand, information technologies are experiencing a new expanding wave. For example, topics such as the management relational database system , the application servers that better support scalability, BPM tools and hardware oriented to services that have not disappeared but have given space, plenty of space, in the IT gurus discussions, other issues such as public, private and hybrid clouds and their “Software as service”(1); the use of tools for Big Data processing Big Data (2); the unified communications capabilities and their integration to corporate processes; the implementation of “Switched Fabric”(3) in data centers, and the implementation of “BOYD” policies(4) in large organizations.

We are in a time in which there are more countries that have more devices connected to wireless networks than people and the organizations concern is not just how to keep something secret, but how to keep something secret and not disclosed over the social networks site or in some anti-something site determined to reveal everything.

By the way, if these topics did not reach the forum for discussing technology issues in your tax administration, do not worry, they will come.

Among many choices, desires, anxieties, pleasures, Ruben Blades chose to dance. Instead of braces, communications, mobile devices or tools, my choice was to discuss the use of information. And that I did for the event “Taxation and Development: broadening the tax base”, organized by the CIAT together with the World Bank Group, the International Tax Compact – ITC, and the Economic Commission for Latin America – ECLAC, and I selected the three areas where the use of ITC should contribute more effectively, for tax administration purposes.

In my opinion, tools, devices, systems, methodologies, switch fabrics, policies can and perhaps should, be aligned, allowing to:

• Reduce time

I heard more than once that some things can be taken easy; after all, the Administration had time, a couple of years or more, to audit a period. But it is also true that the sooner a problem is corrected, it will be less expensive to solve.

The use of information obtained from third parties, the returns, documents and electronic certificates; analytical analysis of large volumes of data to assess risk opens the possibility of reducing the time reaction of the administration in a magnitude order. To react in months rather than in years, in weeks rather than in months, in hours instead of days.

The facilities of proposals, return drafts or notification of inconsistencies in the use of credits from tax withholds at source or in the purchases of goods and services subject to Value Added Tax are examples of the reaction of the Administration and knowledge of the possible consequences in times closer to the occurrence of events, can affect the behavior of taxpayers in the same way that cameras at traffic lights or speed cameras that photograph the license plates in motion, impact in changing the drivers behavior.

• Inter-operate with third parties

Process automation and the use of workflow managers and BPM (5), along with other management practices, and the creation and automated management of cases have allowed improving the efficiency and effectiveness of many processes, their standardization, and the increase of quality of management and even establishing and meeting commitments for timely solution.

These practices can, and perhaps should, be increased to incorporate, where appropriate, the automatic participation of third party information systems in the process.

The example goes beyond the obvious things, such as the exposure of electronic tax compliance certificates or the Customs notification of export operations. I would also go through issues such as notification of the deaths of individuals, which will immediately allow the systems to prevent the processes of reimbursements or refunds of overpaid tax returns filed by those taxpayers or, for the same purpose, the notification of the police or the administration of justice reporting systems on identity theft and detention of people. The possibilities to interconnect those systems are enormous and that through exposed and consumed services, allowing steps or signals provided by third-party systems.

• Standardization

In a previous post, Antonio Seco commented on the importance of having a standard. The development and implementation of a unified scheme based on a national taxonomy to identify prepare and send to the Tax Administration and other competent control organizations, balance sheets, income statements and other information reports of individuals or legal entities required to meet such requirements are feasible, as shown with the implementation of electronic invoicing. This type of standardization would open possibilities for the management of electronically assisted audits and for the management of massive research based on risk management. XBRL or SPED in Brazil are, although different in concept and scope, two alternatives to study in this regard.

Of course this is only my opinion, I could be wrong.

Greetings and luck.

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