Recommendations4Enhancing Online Tax Services.docx

USAID|ARMENIA TECHNICAL ASSISTANCE TO

SUPPORT TAX ADMINISTRATION REFORMS (TASTAR)

ԱՄՆ ՄԶԳ/ՀԱՅԱՍՏԱՆ, ՀԱՐԿԱՅԻՆ ՎԱՐՉԱՐԱՐՈՒԹՅԱՆ

ԲԱՐԵՓՈԽՈՒՄՆԵՐԻՆ ՕԺԱՆԴԱԿՈՂ ՏԵԽՆԻԿԱԿԱՆ

ԱՋԱԿՑՈՒԹՅՈՒՆ (ՀՎԲՕՏԱ)

RECOMMENDATIONS

FOR ENHANCING ARMENIA TAX E-SERVICES

Prepared by: TASTAR

December, 2010

Contents

BACKGROUND INFORMATION

Armenia Tax Administration Strategy 2008-2011 Program outlines the core business goals and reforms to apply in order to achieve those goals.

Among traditional goals, such as: increased and sustainable revenue collection; successful dealing with tax frauds and tax evasions, the strategy targets improvements in: transparency, improving taxpayers’ services, building trust and positive attitude to Tax Administration, and achieving effective and efficient usage of Information and Communication Technology.

Defined goals and objectives are demonstration of the maturity of the Armenia Tax Administration.

The Strategy also demonstrates the realized, by the SRC, need for providing taxpayers’ services in new ways, significantly decreasing the burden on taxpayers.

Decreasing the administrative burden on taxpayers is a key priority for Armenia Government as Governments in many other countries. Over the past few years ministries of finance and revenue bodies in many European countries have set challenging burden reduction targets mainly through programs aim to simplifying and / or reducing compliance obligations, which helping taxpayers interact with the tax authorities in a more efficient and less costly way. In its Strategy Armenia Government intends to make changes to the regulations also.

Since the adoption of its Strategy, Armenia Tax Administration adopted and implemented set of changes to the Tax Regulations, significantly decreasing the burden on taxpayers. For example: E-filing on Tax returns and Report; Unification of deadlines for different type of taxes; decreasing number of payments on different type of taxes; and others.

Other changes are drafted and their adoption is under way. For example: Rules for processing Requests for offsetting and/or refunding VAT Credits.

Improving Taxpayers Services through implementing modern Information Technology solutions, while taking advantage of technology capabilities, also has been in the scope of the activities engaged in the reduction of burden on taxpayers by Armenia Tax Authority.

Nowadays Governments adopt E-Government Strategies and work toward their realization, as the best proven approach for enabling cross-boundary information sharing and delivering government services to citizens and businesses effectively and efficiently.

E-Government is digital interaction between a government and citizens (G2C), government and businesses (G2B), and between government agencies (G2G) at all levels of government: city, state/province, national, and international. It is usually based on adopted Interoperability Frameworks addressing Business processes, Information, and Technology Interoperability.

Standardization of government business processes and enabling more efficient and effective connections across government structure boundaries will result in a range of benefits for government services providers and beneficiaries. To make government services and information more accessible and to improve the efficiency with which those services are provided, government must build the interoperability capabilities of its agencies, harmonize policies and regulations, integrate programs, and streamline business processes.

The focus on all E-Government programs is on:

· The use of Information and communication technologies, and particularly the Internet, as a tool to achieve better government.

· The use of information and communication technologies in all facets of the operations of a government organization.

· The continuous optimization of service delivery, constituency participation and governance by transforming internal and external relationships through technology, the Internet and new media.

During the last year the SRC has been making its first steps in developing and implementing E-Government solutions.

Along with working to upgrade and improve the core components of the Tax Administration Information System, which is critical, in 2009 the Armenia Tax Administration developed and implemented software allowing taxpayers to submit their tax declarations electronically via Internet. The pilot implementation for Large Taxpayers shows that e-filling is well adopted and widely used (more than 3000 users for less than a year). The service is available on the SRC’s web site.

On December 3, 2010 the SRC announced readiness of new system allowing VAT taxpayers to submit information about their VAT Invoices electronically via e-service. The system also provides functionalities for uploading information from Taxpayers’ accounting system. Such a service will save time for Taxpayers and ease their compliance. At the same time it will improve the quality of data into TA System.

In order to support the SRC efforts in improving taxpayers’ services and decreasing the administrative burden on Taxpayers the TASTAR project proposes enhancements to the current Tax E-Services.

CURRENT E-Services This section provides a brief description of Tax E-services in use or ready to be used and shares some suggestions.

E-Filing and E-Submission of VAT Invoices services are integral part of TAXPAYER 3 MIS Project, the SRC undertook a year ago. E-Filling is a great achievement and elevates Armenia to the international standards in submitting tax returns and other reporting documents, required by the Law. The SRC leadership is determined to improve and enhance E-services and ensure modern and robust Tax Administration MIS.

E-Filling The currently operational E-Service for Armenia Taxpayers is E-Filing.

It was developed and piloted for Large Taxpayers in 2009. The e-filing is accessible from SRC web site: www.taxservice.am There is a SRC Decree/Order defining the schedule under which Tax forms will be available for electronic submission. (Decree # 119, dated February, 2010) As per the decree, thirty nine (39) forms will be available for E-filing from January 1, 2011.

E-Services Application for Armenia Taxpayers is a web-based, 3 tier architecture. Technology used for its development is: Java Server Faces (JSF) - a Java-based Web application framework for the development of web-based user interface, Java for the business rules application, and Oracle DBMS.

Functionalities Upon logging into the E-service application the <Home> page displays:

· Main Menu,

· Information in three columns:

· Basic information about taxpayer (TIN, Name, address) and names of persons authorized to execute e-services on behalf of the taxpayer;

· News / Notifications area – intended to publish notification for scheduled system maintenance hours or Specific to the services information: let say – “New VAT form validity starts on March 1, 20XX year”; and

· A Calendar.

Main Menu options are:

< Home> <Forms Filing> <Tax Regulations> <News> <Feedback> <Help>

· <Forms Filing> - has functionalities organized in 4 tabs:

· Tab1: List 25 different forms that can be filled in and submitted to SRC A user can select a form to work with from the list.

Filling in a form for submission functionality has two working modes: (a) Filling in data by keying them, and (b) Uploading data to the form from XML file, an extract from Taxpayer’s accounting system.

Filling in data mode:

Upon selecting from the list of forms a web form is displayed with some pre-filled information, such as: TIN, name of taxpayer, tax period (it can be changed) and other. User can start filling in data into the form. There is an option for invoking help – A Help Document provides detailed instruction on how to fill each item/field on the selected form. During data entry validation controls are executed and errors are identified. Validations include: values controls, calculations control, and math controls. The user can save the form before completing it as draft through selecting: “Save as Draft” option. Later the user can continue working with the form from Tab2.

When form is filled in completely the user has two options: (a) Save it as a Draft, or (b) Save it for Submission. In the first case the submission of a form continues from Tab2, while in the second case the submission continues from Tab3.

Uploading data to the form from Taxpayer’s Accounting system The SRC defined and published for use standard XML files for the main and more complex forms, which source data are taxpayers accounting systems. It is up to taxpayers and their Accounting systems providers to use them. Relevant extracts from accounting system can be made in the prescribed by the SRC XML format.

When the user selects this mode of work the system prompts the user to “Browse” for the file to be uploaded. Form is populated with data from the XML file. The user sees it as in case of data entry and has the same two options: “Save it as a Draft” or “Save it for Submission”.

· Tab2: List of Forms that were partially or completely filled in, but saved as Draft The list provides information about: Forms name, date when the form was created.

A user can select a form to work with. When finalizes it the user can “Save it for Submission”. At that step the system executes some controls and can issue red, yellow, and green messages.

Red messages indicate mistakes or missing information that will prevent the submission.

Yellow messages indicate some math mistakes, which the taxpayer has the right to ignore and submit the forms as it is without making any corrections.

Blue color is used to highlight those fields on the form that were automatically filled in via math formula or by data retrieved from database.

· Tab3: List of Forms that were completely filled in and are ready for signatures and submission – were saved as For Submission The list contains: Form name, date the form is created, how many signatures are necessary (an icon for each required signature), options to see and execute (as PDF version of the form to be signed, Signed form to be submitted).

The user can:

· select the PDF file, generated when the “Save for Submission” option was selected, and sign it, which will change the color of the icon for a signature from red to green

· submit the form if all required signatures are “green” – if this option is selected without having all signature icons green the submission will be not executed.

· Tab4: List of Submitted Forms Here the user can see list of all submitted forms and retrieve and print a Receipt (in PDF format signed by the SRC) for each submitted form. The Receipt not also contains information of Taxpayer, Type of Form being submitted (type of tax, tax period – if a tax return), date and time of submission (which is a measure of taxpayer’s compliance) but also the Unique ID number under which the form is saved into the SRC Database.

Among the list of submitted forms / tax returns and other required reports/ are also those that have been submitted via mail – on paper. Taxpayer can see the content of the form and compare it to the paper copy it has. In case of discrepancy taxpayer will alarm the SRC for the mistake done during the data entry process in order to be fixed. Also there are cases when a mail submitted form is posted to wrong taxpayer. If Taxpayer discovers a form posted to his account which doesn’t belong to it, it also alarms the SRC for the mistake.

· <Tax Regulations> - Allows access to regulations. List is available from which the user can select.

· <Feedback> This option allows taxpayer to address specific issue to SRC. In a web form taxpayer describes its inquiry, question, issue, technical problem, etc. and it is sent to SRC via email. Two peoples at SRC are appointed as help-desk support to handle those inquiries / incidents / issues.

· <Help> - Providing general help to users.

Subscription for E-Filing Each Taxpayer has to subscribe for e-services in order to use them. The subscription is free-of charge but conditional to possessing an e-signature. Tax Administration opens an account and issues credentials for accessing the e-service upon signing an agreement with them and providing copy of e-signature. The Contract/Agreement between Taxpayer and Tax Authority for using e-services is critical. This is a binding agreement between parties clearly stating the responsibilities of each for using or providing the e-services.

When agreement for e-services is to be signed Taxpayer should provide information about authorized person to access and execute e-services on behalf of taxpayer along with sample of electronic signature of the authorized person. Each taxpayer can have more than one authorized person. Each tax form is submitted through e-filing system only if all authorized persons have signed it.

Procedure:

Pre-applying:

1. Identify persons that will be authorized.

2. Obtain e-signature of people that will be authorized.(From accredited organization - The authorized body for issuing and managing e-signature in Armenia is E-Government Infrastructure Implementation Unit OJSC - www.esign.am)

3. Prepare Notary certified Authorizations for those persons.

Apply at Tax Office:

1. Fill in an application for obtaining credentials for e-services (include information about authorized persons along with: sample of e-signatures, copies of ID card, authorization documents)

2. Sign a Contract for e-services. (By authorized Taxpayer’s representative.)

Obtain credentials:

1. SRC issues credentials (user name and password) on the next day of the date of signing the contract. Credentials are handed to the taxpayer is a sealed envelope.

Note:

1. Taxpayer can apply for changing its user name and/or password only in person at the tax office.

2. Taxpayer can add, replace, or just drop a person from the list of authorized persons for executing e-services on its behalf.

Identification and Authentication Solution The identification and authentication are managed through the implementation of:

· User credentials (user name and password), and

· Digital signature of the person(s) submitting a tax form.

Taxpayer / its authorized representative can log in to the system using assigned: user name, TIN, and password. (This is the TIN of the business entity within the Tax Administration system not the TIN of the physical person accessing the e-services as its authorized user.)

E-Submission of VAT Invoices This service is developed and its introduction was announced on press-conference by SRC on December 3, 2010.

The service is under testing. Starting from January 1, 2011 the service will be available for use.

The service works in two modes:

· Online form to fill in and submit, and

· Uploading data from Taxpayer’s accounting system to the required form and submitting to TA. The upload is executed through standard XML format published and available to taxpayers.

The service will significantly:

· Improve Taxpayers’ compliance with this reporting requirement,

· Decrease the time and cost for processing VAT Invoices information by the TA, and

· Improve data quality into TA database.

RECOMMENDATIONS

For Improving E-Filing Service Extend E-filing to all forms and to wider categories of Taxpayers E-filling currently works for 27 forms and while available for all Taxpayers, it is mandatory only for Large Taxpayers. Current number of users is around 3,000.

It is critical that the service is extended to all tax forms and be mandatory for wider categories of taxpayers. Only then the ROI will be good.

There are ongoing activities for making additional 20 forms available for E-filing by the end of the year. Total number of forms, required by regulations, is 59. A decision was made 25 to be available for e-filing in 2010, 14 to introduce for e-filling in 2011, and 20 of them not to be offered for e-filling. (Data are taken from Order issued on Febriary, 2010.)

Add Online Support for User’s Credentials The existing e-service does not provide any online support for credentials (let say for forgotten password). If user forgets a password the only way to restore it is to visit a Tax Administration office to obtain new (as per the current regulations).

While for Taxpayers with more than authorized person for e-filing this could have justification, for Taxpayer with one authorized person is not justifiable.

When a Taxpayer asks for support on forgotten password “secret” questions can be introduced for additional identification and authentication of the person requesting it and “one login” password can be provided via e-mail. So Taxpayer can use it to login and set up a new password.

Ensure System Availability & Required Performance Level Current Tax E-filling System doesn’t have a parallel / mirroring backup that can be switched on if the main system is down due to technical reasons, which creates high-risk especially for system availability. As per standards system should be available 24/7.

System should be stable and reliable enough to handle large amount of information processing, especially during the peak period of e-filing and particularly around deadlines. System should ensure acceptable performance level even during pick periods.

Decrease the traffic of data sent to SRC Implemented rules and technical solutions in E-filing system send and save on the SRC Online Database draft (semi completed, still to submitted) forms. This is a redundant transfer of data from user’s computer to the SRC database. Drafts should be saved on user’s computer/environment and only submitted forms (after all signatures) should be transferred and saved on SRC Online database, from where to be processed into production SRC database.

Relevant changes to business processes and technical solutions have to be made.

Improve the content of the Standard Contract for E-services Current Contract is not complete and comprehensive. It is missing provisions for:

· Unavailability of the SRC E-Filing Service,

· Confidentiality & Privacy of the information, and

· Others Example of comprehensive contract that can be used for improving the Armenia SRC E-filing contract can be found on: https://secure.sarsefiling.co.za/Terms_and_conditions.asp Make E-filing possible through intermediary or without e-signature Cost for obtaining and renewing e-signature could be an obstacle for SME and Individual Taxpayers to use E-filing.

Purchasing an electronic signature costs around $40 and it needs to be renewed each year. While for Large Taxpayer this is a small cost for SME and Individual Taxpayers it could be a reason for not using E-Filling.

Another factors pushing for finding workarounds for using E-fillings are: the low level of computerization in the country and limited access to Internet.

Possible solutions are:

· Introducing E-Filling through Intermediary TA should encourage development of the private sector providing tax services. Those companies should be authorized by SRC to e-file tax forms on behalf of Taxpayers. Such service providers should be registered at SRC as intermediary on E-Filling and their fee for e-filing should be significantly less than Taxpayer can incur for obtaining and maintaining e-signature. (With introducing mandatory filing on Personal Income Tax next year, such companies will be very useful and will mitigate the risk for submitting incorrect and inaccurate returns.)

· Allowing E-Filling with PIN instead of e-signature TA to allow Taxpayers with income under certain amount (usually low income taxpayers) to e-file tax returns without e-signature. E-signature can be replaced with PIN, obtained over Internet from TA or set up by Taxpayer when subscribing for E-Filing, or with additional authentication information, such as: “self-assessed amount reported on the previous tax return”.

For Implementing Additional E-Services E-Government is becoming increasingly more important in today’s world due to its effectiveness and applicability in various areas. Tax E-Services are part of overall E-Government services that can be implemented.

Tax E-services are very good mechanism for decreasing the burden on taxpayers and increase the effectiveness and efficiency of Tax Administration.

E-Services save time while offer flexibility; reduce calculation errors; increase quality of data into TA Systems; minimize the workload at TA; decrease the operational cost for processing tax returns; and eliminate physical contacts between taxpayers and tax officials and related to those contacts exposure to bribes.

The IT Department at the SRC is determined to increase the number of E-Services offered by the SRC and is constantly working to initiate and implement new e-services, despite of the constraints it is facing.

This part of the paper recommends few E- Services to be implemented in addition to E-Filing and E-Submission of VAT invoices that will have multiple, significant, and positive impact.

E - Payment E-Payment facilitates payment of taxes online by Taxpayers.

E-Payment is a Secure, Fast, Accurate, Convenient, and Easy to Use payment method.

There are different models of Revenue E-payment systems:

· Systems requiring e-signature (Slovenia) and systems that do not require e-signature(UK, Bulgaria, India, South Africa, USA),

· Systems working only with debit cards (Bulgaria, India, Slovenia) and systems working with debit & credit cards (UK, USA),

· Systems with or without additional charges.

It is up to the Government what E-payment system to implement.

Revenue E-payment is a Service usually offered by National Tax Authority and it is executed via e-payment intermediary, sometimes as a bank transfer from Taxpayer’s account, and sometimes as debit to a taxpayer’s credit card.

This service can be used by any registered for e-payment taxpayer. Registration for such service is usually online and doesn’t require electronic signature and a visit to a tax office. Usually E-Payment Service allows user to order payments not only to Tax Authority but also to Property & Land Tax, To Automobile and Drivers Control Authority to pay administrative fines, and other from the convenience of one site and upon one log in.

When taxpayer makes a payment via E-payment service the correct TIN is ensured through the log in process (usually TIN is part of the log in along with username and password) or it is taken from the authentication record of the user, which is guarantee that payment will be properly posted to Taxpayer’s account.

Some systems require the unique identifier under which a tax return was e-filled, when the e-payment is on direct or indirect tax. This makes reconciliation process between liabilities and payments very easy.

If introduced in Armenia, the E-Payment service will:

· Significantly save taxpayer’s time for paying taxes,

· Provide a second mean for tax payment,

· Ensure that payment information is posted to taxpayer’s account very fast and accurately, and

· Significantly decrease the burden on taxpayer through ensuring one entry point from where different payments can be ordered and executed.

The first two benefits are indicators in “Doing Business Survey” ranking.

So, if E-payment of taxes is introduced in Armenia, it will improve the ranking of the country on Tax Payments indicator.

In order to unify and provide E-payment service for all taxes, fees, and duties, it is strongly recommendable the State Revenue Committee to implement Revenue E-Payment service. It can be used for paying not only state taxes, such as: CPT, VAT, Excise, Withholdings, PIT, and Customs duty but also: Property & Land Taxes, State Duties, Administrative fines imposed to drivers, and others.

The SRC E-Payment service should be technically and legally bind with E-payment providers that operate under contracts with commercial banks and banking clearing houses (inter-banking systems). E-Payment service usually requires the payee to have a bank account in one of the commercial banks and to ensure sufficient funds in the account at the time a payment order is executed.

I would strongly recommend the SRC to establish a working group and commence immediate discussions on implementing SRC E-Payment service. The working group should look for the best technical and business solution. Banks and banks’ clearing houses should be involved.

Below diagram presents one idea for data flows of tax E-Payment. As you can see there are many parties involved and while the samples and technologies exist, the agreement among parties should be achieved – defining roles and responsibilities.

While the SRC E-payment service is under development, the SRC, in cooperation with commercial banks, should work to encourage taxpayers to use Online Banking services offered by commercial banks. Some commercial banks need to improve their online services in order to capture and process accurate and sufficient information for correct processing of payment.

E - Access to Taxpayer’s Accounts It is important for a taxpayer to see balances as wells as analytical transactions on its tax accounts at any time.

Taxpayer should have options to retrieve, for specific or all type of taxes he/she is liable for, information related to current balance as well as detail records on liabilities and payments, so called Taxpayer’s accounting ledger.

Liabilities recorded (Debit) are coming from submitted tax returns (original and/or amended), issued audit results, imposed fines, and accrued interest.

Taxpayer’s Payment records include information coming from payments made to Treasury accounts, offsets, refunds, and interest accrued on overpayments.

Accounting transaction can also appear as: write offs, reverse transaction due to mistake, and from implementing of specific Government programs (administrative adjustments).

Taxpayer should be able to see any single transaction made on its tax accounts and communicate with Tax Administration if some inaccuracies are noticed.

Taxpayer should know that it takes time liability and/or payment information to be posted to its accounts in the production database. Then some time is needed for the information to be published on online database. The time necessary for posting liabilities coming from tax return submitted through e-filling is just few hours, while for tax return submitted by mail or handed to tax office is a week or even longer (some Regulations citing 15 days as a period for processing a handed tax return). For payment information: Once the payment is ordered at a commercial bank it will take at least 24 hours to be posted to taxpayer’s account and then probably another 24 hours to be published on online database. So, the accuracy of information should not be considered real-time information.

Taxpayers that are not subscribed for E-Services should be able to request and obtain paper copy of their tax accounts at relevant tax office.

E - Taxpayer’s Tax Statement For different public and non-public services taxpayer needs a Statement from Tax Authority about its tax status. The Tax Status Statement is a declaration issued by the Tax Authority stating whether taxpayer has or doesn’t have outstanding tax liabilities. Instead of going to a Tax Office, submitting a written request for Tax Statement, and then waiting few days while this statement is prepared Taxpayer can just access online database and retrieve this statement, print it with system generated unique identifier (some bar code) that will replace the TA Signature and Stamp.

Note: Both Access to Taxpayer’s Accounts and Taxpayer’s Tax Statement services require production / transactional Taxpayers’ accounts database to be complete and accurate as well as Taxpayer’s Registration data updated.

Taxpayers’ accounts database completeness and accuracy can be improved significantly with e-filing and e-payment tax services.

E - Registration Data Update[footnoteRef:1] [1: Confirm with project at Ministry of Justice that the Business Registration System that is under development will not provide this service in order to be included in SRC E-services Portfolio.

In nowadays dynamic business environment, business entities are making frequent changes to their business activities and premises as well as to management and capital in order to increase their competitiveness and keep and enlarge their market share.

Any such change requires, by Law, Taxpayer to make a visit to Tax Authority and provide information related to those changes. It is time consuming for Taxpayer, but it is part of Taxpayer’s compliance and it is important for Tax Authority.

Arming Taxpayers with Online service to provide registration data updates will increase their compliance in that regard and also will ensure updated critical Taxpayers’ Registration Information for Tax Authority.

History of changes to Taxpayer’s registration data should be kept.

The benefits of such service are:

· Ensure easy tool for Taxpayer to be compliant with Tax Regulations ,

· Saves time for achieving this compliance, and

· Tax Authority has accurate registration information for taxpayer (business activities, premises, responsible persons, HQ address and contact information, and capital).

E - Notifications Tax Administration spends lot of time and money to generate, print, and mail notifications to Taxpayers. TA System should capture and store information about issued notifications, such as: what is the notification about, when it was send to taxpayer, when taxpayer received it, and other events and actions connected to the notification. Time stamps of events, changing the notification’s status, are important because for each notification there are timelines, defined by the Law, within which a taxpayer has rights and obligations to fulfill.

E-filing service already gives as an example how Tax Authority can generate, sign, and publish on Online Database a receipt for a submitted tax form and how Taxpayer can see, retrieve, save or print this receipt.

The same approach, but originating from Tax Administration, can be used for sending notification to taxpayer and obtaining back an acknowledgment for receiving the notification. The acknowledgment is instead of return receipt in case of mailing notification by certified mail.

This service will save significant time for both: Tax Administration and Taxpayer. TA cost on notifications will decrease significantly.

So when taxpayer logs in to SRC E-Services he/she will see in its incoming box a blinking sign, indicating new notification (a PDF file signed by the SRC). He/she will be able to open, print, or save the notification and send and acknowledgement.

What notifications can be send to Taxpayer?

· Notification for outstanding debt,

· Notification for un-submitted (due) tax return and imposed fine,

· Notification for rejection of application for offsetting and / or refunding of VAT Credit,

· Notification on the Final allocation of VAT Credit to offset, carry forward, and refund,

· Notification for approved schedule for debt payment through installments, and

· Others.

Note: As per my information the SRC E-services team is working on Publishing Notifications to Taxpayers.

Notifications to Taxpayers that are not subscribed for E-services will be sent using the traditional way –mailing. Usage of e-mail and mobile technology also can be considered as options.

E - Reminders Tax Administration can publish on online database reminders to Taxpayers for approaching deadline and expected from them actions. When a taxpayer, registered for e-services, logs in to the e-services portal he/she will be able to see “blinking in red” new reminders and plan his/her actions.

This prevention technique will increase taxpayers’ compliance.

For those taxpayers that are not subscribed for E-Services such reminders can be sent via e-mails (Taxpayer’s email should become important data in Taxpayer’s registration information). In some countries even mobile technologies are used and notifications are sent via SMS.

Reminders that are applicable to a significant group of taxpayers can be announced through mass media also (for example approaching deadline for submitting Personal Income Tax; approaching deadline for submitting Corporate Profit Tax return; and etc.). Personalized reminders should for specific for taxpayer’s issues.

E - Services for Appeals, Refunds, and Excise Stamps E-services should provide functionalities to Taxpayers for:

1. Submit an Appeal against SRC decision.

2. Track the status of the appeal online.

Log in to the system and check the status of submitted appeal.) Case management functionalities for Appeal cases should be implemented in the TAXPAYER 3 System.

3. Submit a request for refund (application for offsetting and/or refunding VAT Credit).

4. Track the status of refund.

Log in to the system and check the status of submitted request for refund.

5. Submit a request for Excise Stamps.

Upon submission of request for Excise Stamps, the E-service should return the date and time when Taxpayer should visit a Tax Office to obtain requested Excise Stamp. Excise Stamps can be collected after a relevant payment is made to relevant Treasury account. This payment is considered as an advance Excise Tax payment. (This was implemented in Georgia in 2007.)

Note: Submission of all those applications/ requests is similar to e-filing forms but with extended functionalities, such as: track the status of an application / request; obtain information for a scheduled visit; and others. Case management applications for appeals, for refunds, and for excise request should be integral part of the Integrated Tax Information System of the Tax Administration (TAXPAYER 3). Information from those case management systems will be published on Online Database for the purpose of Online checking the status of specific application.

E - Service for VAT Identification Number validity check Knowing that the company, you are doing business with, has a valid VAT registration number is important. This is some kind of self-protection to your future VAT Refund.

The SRC system can implement e-service allowing anyone, even those who are not registered for e-services, to check the validity of a VAT ID, used on invoices for business transactions. It is a simple service that should be available on SRC web-site.

To make this service possible the SRC should maintain updated simple registry of valid VAT Taxpayers (VAT ID and Taxpayer’s Name) on its online database. So when a user selects this service the system should prompt the user to enter and submit a VAT ID subject to verification. Then the system should check and return:

a) A message that such VAT ID doesn’t exist, or

b) A message confirming the validity of VAT ID and to display the name of the business entity having this VAT ID assigned.

Note: This service is mandatory for each country, member of European Union.

Online Services for cross-institutional cooperation (G2G services) Government institutions should cooperate in order to increase their effectiveness and efficiency. Authorized online access to certain information can help significantly in this regard. Below are described few online services as examples for cross-institutional cooperation.

· Check Taxpayer’s Tax Status (Tax Statement)

· For car registration - When a Taxpayer would like to register a car, the registration authority can access Tax Authority Online database (upon authorized access) and check whether this taxpayer has unpaid taxes. A rule, requiring complete payment of tax debt, can be adopted as a pre-condition for car registration. This is some form of enforce collection of taxes based on cross- cooperation among different government institutions. The rule can be applied only to new cars which value is higher than certain threshold.

· For unmovable property registration - Similar approach can be applied when somebody would like to register unmovable property. In some countries a Taxpayer’s Tax Statement is needed, by Law, in order a property to be registered (for legal and physical entities). Instead of asking the owner of the property to obtain and deliver a paper statement signed by tax authority, Property Registry Agency can be authorized to access and check taxpayer’s status online.

· For processing loan application – Banks, when processing an application for load, usually require a loan applicant to provide its Tax Statement. Instead of paper Tax Statement banks can be allowed to access and check applicant’s tax status online. Being private entities, banks can be charged a fee for this service.

· Check Taxpayer’s Registration Data

· For Customs transaction – Sometimes Customs need an access to TA System to retrieve and compare basic registration data for a company executing an import/export transaction. Customs officer can be allowed to have online access to this information.

Development & Implementation Approach The core of currently operational E-filing system was developed by a private Software Development Company. The system was handed over to the SRC e-services team and the team is responsible for system support and maintenance. The team already did some improvements. For example: Added an option for invoking a help instruction for filling in a selected form. The team is working to make available additional forms for e-filing by the end of the year. So from January 1, 2011 thirty nine (39) forms will be available for e-filing. Also I understood that the team is working on E-Notifications service.

For the development and implementation of new additional E-Services the SRC could apply different approaches based on their priorities and available resources. The SRC can use in-house development or outsourcing.

Recommended additional E-services have different impact on taxpayer’s time for preparing, submitting, and paying taxes and on improving TA effectiveness and efficiency while decreasing TA operational costs.

It is justifiable to introduce first those E-services that will have the fastest and the most positive impact on decreasing the administrative burden on taxpayers; increasing the quality of data into TA system, which immediately will improve collection, audit, and refunds processes; and on improving Armenia Doing Business Survey ranking.

The SRC should complete analysis and prioritization. Below is just one idea how things can happen.

For the enhancements to the Armenia Tax E-Services portfolio a phased approach is proposed. Each phase addresses specific tasks and results. For each phase a target deadline needs to be set up at initial planning.

Phase 1:

This phase includes completion of the following tasks:

· Extend E-filing to all forms and all categories of taxpayers, while developing e-filing intermediary services and/or simplified e-filling options.

· Develop and implement E-payment service, along with introducing other payment means[footnoteRef:2]. [2: Examples of other payment means are: checks, money orders, credit cards, and direct debit agreements.]

· E-registration data updates.

Note: During this phase it is very important to establish a Call Center – effective Call Center requires: (1) very well trained staff, and (2) accurate Tax Administration databases that can provide correct information for each taxpayer on any tax issue.

Phase 2:

This phase should focus on:

· E-reminders,

· Access to and review of Taxpayer’s accounts / Taxpayer’s tax status (Taxpayer’s Tax Certificate),

· E-Notifications, and

· E - Submission of appeals, request for VAT refunds, Request for Excise Stamps / Banderols and case tracking status.

Phase 3:

This phase should cover tasks, such as:

· Validity check on VAT Identification Number, and

· Cross-Institutional Services NOTE: Each of proposed E-service requires detail requirements specifications and design after defining and adopting consistent requirements to be applied to each service. This can be achieved through design of SRC E-Portal that to ensure consistent look and feel with access control and procedures for multiple applications and databases. The SRC e-Portal has to be designed to be easy incorporated into the SRC website.

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