“New technologies can bring our economic salvation or threaten our livelihoods … or both“(Professor Austin Goolsbee, University of Chicago-USA).

Recent innovations, based on concepts and tools of digital technology, are increasingly revolutionizing practices, procedures, controls, work processes in all organizations and types of professions. They overcome existing constraints, particularly in the bureaucratic processes, management practices and outdated and imprecise tools that permeate organizations.[2]

The massification of innovative technologies has driven what we call digital transformation. Individuals, companies, governments and organizations, no one is outside their influence. It is a global and shocking phenomenon. The digital transformation would be the integration of digital technology in all business areas of an organization that results in fundamental changes in its operations and in the way it generates value.[3] The word “disruptive ” has become much more frequent to express the deconstruction of old businesses, methods and processes that are replaced by digitalization. The Internet of Things (IoT), big data, 5G, revolution 4.0, blockchain and so many other unfamiliar terms emerged on the path of the new paradigm.

Tax administrations are constantly seeking efficiency gains. The technology facilitated the processing of large databases and allowed the study of taxpayers’ behavior, which is used in the various risk analyses.

This applies in the Federal Revenue of Brazil. Digitalization has strongly supported the processes of audit, registration, collection, selection and tax disputes. Since the first computer program used to complete out the income tax return of individuals until today, huge changes took place and the speed with which they arise has increased. However, the need for digitalization became even more evident after Covid-19, which severely impacted work processes. That also pointed to the importance of the dilemmas that digital transformation has brought.

Digital Transformation in Brazil’s Receita Federal

In 1991, Receita Federal created the first computer program to complete the personal income tax (IRPF) declarations, 67 years after the creation of the first paper form. In principle, taxpayers filled out their returns and delivered them in authorized commercial banks, or in the offices of the tax administration. In 1997, the Receitanet programme was also created, allowing the transmission of tax returns over the Internet. Taxpayers could transmit their tax statements from their homes or their offices.

Since then, digitalization has progressed at great strides, in addition to increasing processing capacity, data crossing and error prevention. All tax returns are being digitalized and in 2010 Receita Federal received the last  personal income tax return on paper. Currently, thirty years after the first software for the declaration of the personal income tax, Receita Federal offers the taxpayer the declaration pre-filled in the cloud for them to confirm it. In addition, returns can be completed and transmitted not only by computer, but also by mobile applications. In this year of 2021, 34 million taxpayers submitted their returns through the Web, a large volume of data that requires great processing capacity on the part of the tax administration’s computers.

In 2007, there was also a fundamental change: the launch of the Public Digital Accounting System (SPED). The SPED is a modular system and among its modules are the Electronic Invoice (NF-e), Digital Accounting Bookkeeping (ECD), Digital Fiscal Bookkeeping (ECF), in addition to other modules.[4] SPED provides companies with a single computerized environment for compliance with their accessory obligations before the Brazilian Union and state tax authorities.[5] In the SPED environment, companies issue their electronic invoices and tax documents, in addition to developing and organizing their accounting, so that Brazilian tax authorities do not need to demand other accessory obligations. The corporate income tax return was abolished in December 2013, when the ECF module of the SPED became mandatory. The SPED project had not only the participation of Brazilian public attorneys and public agencies, but also the contribution of companies.

The development of SPED modules has provided great advances in the digitalization of the Treasury. The need to process the immense volume of data definitively introduced Receita Federal in the era of big data. For data management, Receita Federal created its own data lake solution: RECEITA DATA. The creative potential triggered our staff to develop innovative solutions, which with advanced analytics and artificial intelligence resources, are used in tax audits, collection, customs clearance and dispute resolution. With the SPED, Receita Federal has also developed new projects and products based on big data, such as the projects for the computation of the tax gap, the input-output matrix and the Electronic Invoice Bulletin, which allows the aggregate sales situation to be known in real time, a particularly useful tool for monitoring the economy during the Covid-19 pandemic.

2020 and  2021-  The Covid-19 pandemic and the new forms of relationship with the citizen

The Covid-19 pandemic accelerated the digital transformation in the world. At the Receita Federal, not only officials switched to remote work as they also increased remote services to taxpayers. Receita Federal’s strategy for the provision of services during the pandemic was based on three main axes:

• maximizing services through digital means while face-to-face services were reduced to the essential;
• consolidating digital channels; and
• interoperability.

In the service area, in addition to the face-to-face service, Receita Federal already had self-service through its e-Cac Portal. With the isolation and distancing measures derived from the coronavirus pandemic (Covid-19), the digitalization of services and the virtualization of care accelerated. Thus, the virtual channels of interaction available to citizens and companies were expanded, such as the Digital Service File (DDA), the ChatRFB, ChatBot and the corporate mailbox (“Fale Conosco”). Forty (40) services that were face-to-face became digital and with effect there was an increase of close to four times of the digital files opened in the e-CAC portal, since May 2020.

Another novelty is the integration of government digital channels on the site Gov.br.[6] Previously access to the e-Cac Portal was possible only through a digital certificate. Now, after the integration of e-CAC to Gov.br, access by access code to diverse services of the portal is also allowed. With the Gov.Br access, citizens who do not have a digital certificate can also access the e – CAC, thus universalizing access to virtual services of Receita Federal.

In addition to the services available in Gov.br, citizens also have Receita Federal services in mobile applications (”apps”), free of charge. For example, the registration of individuals, called “CPFDIGITAL,” is available by biometrics or access code. Through this service, citizens can check their situation with the taxpayer registry, update their data and also use it as an official identification document.

Figure 6-The Digital CPF

Another point is interoperability between governance systems. By sharing data between public bodies, it is possible to improve the services of Receita Federal by the information received from other bodies and vice versa. A clear example in the pandemic was the payment of “Emergency Assistance” to the most vulnerable citizens, whose identification has depended heavily on data shared by Receita Federal. Another innovative example was the use of billing information contained in Receita Federal databases for micro and small businesses to provide them with a government credit line during the pandemic. In PRONAMPE (as the program has been called), the reported value of income was essential for the definition of credit, which made it possible to help these companies and also promote tax compliance.

Looking from the past to today, Receita Federal has constantly sought innovation. Technology allowed it to find new ways to guarantee access to tax information and obtain taxpayers’ compliance with their obligations. Now, digital transformation opens up a much broader vision that has the potential to solve the compliance problem. However, this requires a significant effort of organizational adaptation and preparation of the staff.

The dilemmas of digitalization

If on the one hand digitalization brings efficiency on a large scale, it is also true that it brings new dilemmas. Tax administrations must reflect on the effects of digitalization not only on their work processes, but also and on their own identity, their business models, their strategies, their values and their people. In addition, tax administrations still have to examine other relevant issues, such as data security, citizen privacy and ethical values in the use of recent technologies.

Conclusion

The new digital technologies that characterize the fourth industrial revolution, such as the internet of things, cloud computing, artificial intelligence, machine learning, automation processed by robots, augmented reality, data lakes and other innovations keep revolutionizing the public and private businesses in the so-called digital transformation. This is a shocking and global phenomenon, without historical precedents. The uncertainty that is approaching people and organizations is what motivates the preparation to face new challenges and that is necessary and urgent. This is what governments and their tax administrations around the world do.

In this context, Receita Federal of Brazil considers digitalization as one of its assets. Essential  changes have taken place in recent years, from the first personal Income tax return delivered electronically in 1991, to the creation of the SPED and the electronic invoice in 2007. Today, we are digitalizing services, participating in digital government, intensifying our uses of databases, developing artificial intelligence systems, using robots, that is, we are strongly dedicated to discovering how recent technologies can improve our work processes, correctly measure risks, reduce evasion and solve the problem of tax compliance.

However, all this technological progress will not achieve success unless the dilemmas presented to tax administrations are overcome. It is necessary not to lose sight of what we exist for, what we give to society and our own identity. We are millennial organizations, we go through wars and hecatombs, but digital transformation is something new and disruptive. It is necessary to recognize the values that guide us and also that when new questions arise due to recent technologies, that we know how to find answers. Our policies must include recent technologies in our work processes and the human dimension of our tax administrations must always remains the most important.

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