15th June 2020
We’ve long talked about the on-going technology developments that governments worldwide are investing in. As the fight against tax evasion continues to rage across the globe, sophisticated software is increasingly being used to sniff out less-than-scrupulous behaviour from individuals and businesses alike. And it would appear that the current pandemic has sped up some of these developments out of sheer necessity. So, what has happened since the first lockdowns were implemented and how will contractor compliance change as technology is increasingly used?
Technology and contractor compliance: what recruiters need to know
A recent feature in Forbes outlined some rather interesting insights from the likes of the OECD and other sources. According to the author of the piece, self-service tax is ‘the name of the game’ at the moment as authorities increase their digital capabilities to better allow taxpayers to submit relevant documents without contact with a person – simply because the latter is not an option right now. Although driven by demand, the possibility of at least some of the temporary measures that have been put in place remaining post Covid-19 is very real. In fact, if we look at examples across the globe, technology, Artificial Intelligence (AI) and digital developments have made compliance slightly easier for contractors and the agencies that place them. As a case in point, in Australia, the Tax Office has used a virtual assistant – known as Alex – to make self-service much easier. Citizens are able to ask Alex 84,000 different questions, all of which they would have had to ask a person prior to the implementation of this software. And other authorities are also looking at the likes of online chats and auto-fill options on returns to streamline processes and, hopefully, encourage more people to be compliant.
Making online easier
Not all technology being utilised is as advanced as chatbots like Alex, though. There are a number of arguably more simple steps being put in place, including making online submissions much easier and expanding the range of issues that can be managed virtually. While we could reference a variety of examples of this, Singapore’s Inland Revenue Authority has a reputation for its strong online options and its e-filing service was one of the first of its kind to be used in Asia. As Covid-19 led to the country being on lockdown, it closed every taxpayer office and was able to shift tax payments and filing solely online. It also has a digital portal where handling penalty waivers and appealing late payments can be managed – something that hadn’t previously been available. With these processes proving successful, it’s highly likely that we’ll see the continuation of online resources being used in Singapore once the destination is able to better return to ‘normal’.
Other countries that were perhaps less adapted to online options prior to Covid-19 have invested in digital portals during the crisis, with the likes of Brazil, Chile and Hungary handling more tax related issues electronically. New Zealand has also asked taxpayers to use the available digital Inland Revenue tools throughout the crisis.
Meeting customer needs
Not all technology developments in the contractor tax compliance landscape are being driven by Covid-19, though. The need for quick communication and simple processes has, in general, continued to push more authorities to reconsider their digital tools. In the UK, for example, HM Revenue and Customs (HMRC) has long faced criticism over its customer service standards as waiting times and responsiveness to enquiries were increasingly deemed unacceptable. While the likes of webchats and new online tax account functions were added by HMRC several years ago to address this issue, at the beginning of this year it also revealed greater self-service functionality.
Taxpayers can now self-assess deferred payments to create an independent pay schedule on line, provided they don’t owe over £10,000, putting more control into the hands of the individual when it comes to defining their payment arrangements.
While these steps were being implemented prior to the pandemic, they have arguably been accelerated further as a result of the outbreak, with HMRC now increasing its webchat and email capabilities as a direct result of the lockdown.
The crackdown on non-compliance
For any of your contractors working overseas, its important to be aware of any compliance related developments in certain countries as a result of coronavirus. As the Forbes article explained, there are cases where measures that have been introduced in light of Covid-19 are bringing compliance issues to the fore. If we take Ghana as an example, the government implemented a tax amnesty in 2018 in response to reports that less than half of eligible taxpayers were filing their returns. This nine-month scheme meant that registered taxpayers could waive interest and penalties for all tax years through 2017. Unregistered taxpayers could also take part in the amnesty, though it would be for a shorter period.
Unfortunately, this attempt at regaining lost revenue didn’t quite go to plan, with the Ghana Revenue Authority (GRA) reporting significantly less returns than expected. As Covid-19 hit, the concern for the country was the possibility of this situation being exacerbated by the pandemic. To best prevent a further decline of people filing taxes, the GRA turned to technology and online tools have been set up to allow documents to be submitted and payments made electronically.
Technology: making contractor compliance easier and more important
It’s certainly clear that the current pandemic has accelerated the use of technology by governments worldwide, with making processes easier and quicker arguably forming much of the reasoning behind moving things online. However, what’s perhaps more important, though, is that this has also made identifying non-compliance significantly simpler for many administrations.
Digital tools will be hugely valuable for authorities to share information across borders and catch up with any wrong-doers – in fact we’re already seeing the effects of this with the likes of the Criminal Finances Act 2017. For recruiters placing contractors overseas, the advancements in technology have made compliance more important and more complex than ever before. Even a simple administrative mistake from your firm or the expats you place could land you in hot water, so it’s crucial that you have the right support to ensure you remain on the right side of tax regulation no matter where in the world your agency operates.
Contact our team of experts to find out how we can help your firm with any tax compliance concerns.