The reasons for these moves are not difficult to understand. Governments are continually looking for ways to boost revenues. But there are limits to how much they can raise tax rates or impose new taxes before both voters and businesses start to push back. The most apparent method is to plug leakages in the tax system.<\/p>\n\n\n\n
A 2018 analysis by McKinsey & Co suggested that globally about USD 5 trillion of government revenues \u2013 roughly 20 per cent \u2013 go missing each year. These are in taxes owed but never paid or outbound payments gone awry.<\/p>\n\n\n\n
Before the pandemic, worldwide government deficits were expected to be 2.6 per cent of the estimated GDP in 2021. According to the McKinsey study, improving revenue collections by just one per cent of GDP \u2013 through the use of big data and analytics \u2013 would eliminate over one-third of the deficit, equipping leaders to make and implement better policy choices.<\/p>\n\n\n\n
The pandemic has, of course, led to massive spending by governments worldwide to support businesses and people. But this is only making the hunt for additional revenues more urgent. Administrations are using the latest technological tools to make tax compliance a continuous process in order to get their fair share of taxes and plug leakages.<\/p>\n\n\n\n
Compliance \u2013 From Snapshot to an Ongoing Process<\/strong><\/p>\n\n\n\n Governments’ use of big data and analytics enabled by technology is permanently changing the entire tax compliance process. This is how it is shaping up.<\/p>\n\n\n\n E-Filing: Electronic filing of returns<\/p>\n\n\n\n E-Accounting: Filing supporting data to justify the E-Filing (e.g. Standard Audit Tax File)<\/p>\n\n\n\n E-Match: Matching a firm\u2019s GST\/VAT filings to other areas like corporation tax, customs duties and withholding tax<\/p>\n\n\n\n E-Audit: Auditing of any anomalies that data throws up<\/p>\n\n\n\n E-Assess: Assessment and scrutiny of filings is driven by Data Analytics and Algorithms<\/p>\n\n\n\n In this changing dynamic of tax compliance, authorities are no longer satisfied with just looking at a snapshot and then checking six or 12 months later. It is a more continuous process.<\/p>Wilson Ang, Partner, Head of Asia Regulatory Compliance and Investigations Practice, Norton Rose Fulbright<\/cite><\/blockquote>\n\n\n\n Speaking recently at a Thomson Reuters webinar, Mr. Ang said, \u201cRegulators and law enforcement are not simply content with ‘these are the laws, and you need to comply with them’. They are moving beyond that to say what processes you have to comply with for them. And now they are moving beyond that to ask \u2018what data do you have to inform yourself on the compliance of such processes’. <\/p>\n\n\n\n![\"\"](\"https:\/\/lh6.googleusercontent.com\/F8cmwVHd5gPqUnNwZ7uuo1C5JUNemPoAPx4mtENv8KmPkqNin4GUyY8iNiME3NqddQXryamfPYfwLpnFl1SZtVI3Fa-lJ8ZH5WqhVaVOzfkVgh_u-FAUJy8l3Xgd5d7-11NDLIBN\")