The digitalization of the Tax Administrations and the future of Teleworking

We currently see the public as well a private sector attempting to digitalize themselves quickly, in view of the isolation measures decreed by a significant number of countries vis—vis the coronavirus world pandemic.

We are faced with a reckless race for urgently digitalizing all their processes and thus be able to continue providing services or selling goods.

Therefore, I deem it very significant, as I have been doing in different posts to highlight the importance of digitalizing the Tax Administrations (TAs) that are faced with a great challenge, but also a great opportunity for definitely advancing toward the digitalization of all its procedures.

This digitalization should be included in the rendering of services as an integral part of the digital government concept.

The Digital Government is characterized by the digitalization of public services, the extensive use of public and personal data, the introduction of algorithms to automate the processes and encouragement for developing Artificial Intelligence applications to automate the public sector functions and activities.

As has already been said digitalizing governments is a challenge. Those that have adapted themselves better to the Internet were also share certain characteristics. What is most important is that they created small and multidisciplinary digital equipment, placed them at the core of public service and allowed the freedom to work in new ways. These equipment were focused on providing solutions to satisfy the users’ needs.

Currently, TAs are urgently seeking to digitalize themselves and arrive at what is known as electronic Administration, which implies different coordinated elements: technology, rules and management models.

 The concept of e-Government as defined by the European Commission implies “The use of ICTs in Public Administrations, combining organisational changes and new skills, in order to improve public services and democratic processes and to strengthen support for public policies”.

But all of this has significant results, since among the main advantages of electronic Administration one may mention as possible ones:

• Greater transparency.
• Lower costs and greater revenues.
• Increased efficiency and effectiveness.
• Struggle against corruption.
• Electronic cooperation with other TAs.
• Interoperation (capacity for exchanging information and using it)
•  One-stop shop..

I wish to point out that one of the great advantages of betting on the digitalization of the TAs is that it promotes transparency, which is key in the struggle against corruption.

The OECD and many other Organizations and countries are firmly working on the issue of electronic government and have issued, among other documents, a recommendation(1) whose objective is to support the development and implementation of digital government strategies that bring governments close to the citizens and businesses.

Therein, it is recognized that the current technology is not only a strategic promoter for improving the efficiency of the public sector, but it may also support the effectiveness of the policies and create more open, transparent, innovative, participative and reliable governments.

Some of the advantages for the TAs of digitalizing their structures as well as their functions are:

• Working with digital files, with electronic signatures and electronic notifications, instead of paper files which one should tend toward their reduction.
• Allowing the teleworking or home office
• Considering the new forms of taxpayer information and assistance (attention through the web of the TAS or through mobile applications) wherein the trend is toward the reduction of physical contacts with the taxpayers.
• Using the huge amount of information available in the TAs not only internally, but externally as well, as a result of the increasing forms of cooperation / collaboration resulting from, among other things, information exchanges and all that related to the OECD’s BEPS Action plan.
• Implementing such concepts as compliance risk management (CRM) whenever possible, trying to intervene in earlier stages, and not after the tax returns have been filed with which massive controls will prevail over the intensive ones.
• Offering pre-filled tax returns.
• Promoting collaboration and integration between different public entities and the TA of a same state, as well as between different countries through such processes as one-stop shop.
• Counting on information systems to render control more efficient, since definitely, currently the work of the TAs is to administer information and for this reason I wish to highlight the great importance of counting on information systems for carrying out massive and intensive controls.
• Improving the quality of information since, as I always say, it is not only a matter of capturing much information, but rather what is important is to work strongly on its quality and to analyze and use it in an effective manner.

Within these issues, it should be pointed out that recently, the governments of the entire world, as a result of the coronavirus are approving temporary organizational measures for the State employees, one of them being teleworking.

Teleworking has multiple benefits for the worker as well as for the TAs. Outstanding among them are greater autonomy, flexibility and mobility, reconciling work with family life, reduction of stress, less travel with the resulting reduction of pollution in large cities, savings in office costs among others.

Teleworking is work done remotely using ICTs to sell products or provide services to the world. Among the ICTs needed for these tasks are basically PC, Internet, cell phone, telephone and digital camera, among others. Within the Internet, this mainly includes web browsing and e-mail. And, depending on the case, blogs, websites, translation software, instant messaging (chat) and IP telephony (voIP).

Teleworking has multiple benefits for the worker as well as for the TAs. Outstanding among them are greater autonomy, flexibility and mobility, reconciling work with family life, reduction of stress, less travel with the resulting reduction of pollution in large cities, savings in office costs among others.

I would like to stop and consider the difficulties being currently experienced by the TAs, as a result of the coronavirus and the urgent implementation without due planning of teleworking.

In this respect, I am convinced that the more advanced the process of digitalization of a TA, the less the inconveniences that must be faced.

A common problem in many countries is to digitize and train the taxpayers as well as the TA officials in the use of the new ICTs, especially in generations not yet familiarized with digitization.

It is not a simple task and much less when it has had to be accelerated as in the current circumstances.

From the standpoint of TA workers, one may list, among others, the following problems arising from the coronavirus pandemic and the need for teleworking:

• Difficulty for all workers to count from their homes with the remote accesses they have in the TA offices.
• Not counting on all files, guides or models they have available in their office computers.
• Not counting on documents that are in their offices for continuing with their tasks at home.
• Not having available in their homes, bibliography and written consultation material which is available in the offices.
• Not having in their homes, the necessary computers or computerized resources for teleworking.
• Not being able to register for purposes of management control all tasks carried out from their homes.
• Not being able to sign administrative acts in digital form from their homes.

From the standpoint of the taxpayers, in addition to the issue of the great financial and economic difficulties for facing their tax obligations, if we consider the relationships with the TAs, there are, among others, the following difficulties:

• Presenting procedures in a digital manner, since not all are stipulated in the regulations
• Responding in a digital manner to requests that were made on paper.
• Communicating with the offices if they are closed. That is, which alternate communication channels are available.
• Inability to file appeals or reviews in a digital manner, if it is not provided in the regulations.
• Make payments of specific obligations whose electronic payment is not provided.
• For specific groups, electronic communication with the TAs is still an important problem, for which reason the TAs must set up assistance channels so as not to oblige those groups (in general, the most disadvantaged ones) to incur in additional costs by having to resort to private professionals.

But what will happen with telework in the Tax Administrations (TAs)  following the conclusion of the restrictions of the covid-19. That is, assessing its potential.

I believe that when it comes to evaluating the possible continuation of telework, the following aspects, among others, should be analyzed:

 1. Legal regulation of Telework: rights and obligations of the parties.

Undoubtedly this is also a key issue; this includes the analysis of the legislation in force in each country in relation to teleworking.

According to a recent document of the IDB [2] in Latin America and the Caribbean, some countries such as Colombia[3] have a more advanced legislation. In some countries, telework is regulated as “distance work”, such as in Chile. In others, like Mexico, it is regulated as a modality of “home-based work”, characterized with using ICTs, while in Colombia and Peru the legislation makes express reference to the term telework.

With respect to Europe, in July 2002 the European Framework Agreement on telework was signed in Brussels and various countries have advanced in their legislation.

The referred IDB document establishes some requisites that must be considered when regulating telework, such:

Written contract which includes the rights and obligations

Equal treatment since the teleworkers must be entitled to the same rights and benefits as the face-to-face workers, such as social security and parity of remuneration.

Wilfulness and reversibility or, that is, that the face-to-face workers that become teleworkers have the right to revert said situation and go back to the face-to-face activity.

Equipment and associated expenses should be provided by the employers, although the parties may agree that the teleworker use his own equipment, for which he should be given a compensation for the costs.

Security and health of the teleworkers is a responsibility of the employer.

Work shift may be subject to different approaches, such as excluding telework from the limitation of the work shift up to organizing the work schedule within certain limits.

Telework modalities may be permanent when telework is carried out throughout the shift, or partial, when telework is combined with face-to-face work.

Classification as subordinate work or autonomous work.

 2. Productivity and telework.

Specifically, this deals with determining whether carrying out the task through telework implies a greater or lesser productivity for the TA in question.

Any analysis made during the current confinement period must be separated from different factors which should not be considered following the conclusion of the pandemic since, for example, the work is being carried out with children and the entire family at home.

Some opinions suggest that control is not the way to increase the productivity of the individuals and this is being shown in the daily practice. Likewise, it is said that a larger number of hours is worked than when the work is done in the face-to-face[4] modality.

An issue of increasing concern in teleworkers is the hyper-connectivity and its negative effect on the harmonization between the family and labor life. Some European countries have already formulated legislation on the issue[5]; however, in Latin America and the Caribbean, there has been little progress in this respect.

Several reports, among them, that of ILO – Eurofund [6] highlight as advantage for the workers as well as the enterprises, the increase in productivity and point out studies carried out in different countries.

I believe there is much to be analyzed in relation to this matter and most certainly it will demand very detailed studies applicable to TAs, with respect not only to productivity, but likewise the managerial control of any task or process to be carried out through telework.

3. Level of digitalization of the TA and the country in general. Human and Material Resources.

This implies an analysis of the human and material resources available for teleworking.

The level of digitalization of the functions, processes, and tasks of the TA, as well as of the country in question, need to be verified.

It will be necessary to analyze whether, for example, the procedures or tasks may be presented in digital form and worked by means of digital files, with digital signatures and notified through electronic tax domiciles.

Another key issue is the diagnosis of the TA’s human resources, especially determining whether the staff is not familiarized with digitalization, in which case there will be a need for the corresponding training and development actions.

Leading remote teams is a complex task, totally different from doing so on a face-to-face basis. Therefore, it is necessary to evaluate whether there are profiles of teleworkers capable of adapting themselves, with full knowledge of the modality and the opportunities it generates.

The country’s level of digitalization is very important. That is, how advanced it is in the issue of electronic government, as well as the essential technical requirements such as connectivity to internet, equipment, and ICTs available in the homes.

In the aforementioned ILO – Eurofund [7] report, it is said that the incidence of telework is related not only to the technological developments in different countries, but also to the existing economic structures and working cultures.

Finally, it is vital to analyze how computerized and familiarized with the digital world the taxpayers are, in order to electronically communicate themselves with the TAs, as well as considering the level of informality, inasmuch as it evidently renders difficult the digitalization processes.

 4. Security and Confidentiality of the information.

Currently TA involves administering information[8], and therefore the security and confidentiality of the information available in the TAs is an extremely critical issue that constitutes the fundamental pillar of the tax systems, and for which reason there must be the assurance that said information will not be disclosed in an undue manner.

This issue is legislated in all the countries. If TA officials disclose or disseminate information about any taxpayer obtained in carrying out their functions, it is classified and considered an offense[9].

Telework outside the Tax Administration offices poses new and important challenges. Therefore, it is essential to apply the same procedures, processes, and control as in the case of face-to- face work and that the pertinent changes be made, as appropriate, to cover all the risks.[10]

For example, it is necessary to review the policy regarding remote accesses, registration and control of accesses, authentication systems, use of public networks, digital signatures, as well as auditing and controls to be carried out for guaranteeing the confidentiality and security of the information[11].

An important aspect to be considered is, whether in order to do the telework the officials must transfer to their homes files or paper documents that are in the offices, with the subsequent risks involved, such as thefts, deterioration or loss of documents.

As final ideas, I consider that digitalization is key today, more than ever in the TAs and through it, they latter should be in better conditions for improving their efficiency and effectiveness in the struggle against fraud, providing better services to the citizens, reducing the compliance costs, promoting transparency (against corruption) and always respecting the taxpayers’ rights.

We are currently in a historic moment in the stage of digitalization of the public and private sectors. It has been obligatorily accelerated as a result of the coronavirus pandemic.

On the one hand, those TAs that are more digitized are being able to more rapidly carrying out their functions and more efficiently complying with their task.

On the other, those TAs that are not yet digitalized, although they are day-by- day trying to overcome their difficulties, I understand that they will learn the lesson of how important it is to bet on digitalization.

Whether telework will continue in the Tax Administrations, I do not think there is a simple answer, nor can it be standard for all TAs or all their tasks and processes and much less all their workers and/or taxpayer segments.

Everything seems to suggest that telework is here to stay in our TAs, by combining it in many cases with face-to-face tasks.

Every TA that decides to continue with telework must analyze the aspects I have mentioned and certainly, there may be more aspects to evaluate which I may have omitted, therefore I invite you to give your opinion in this respect.

The future will surely find us all more digitized and perhaps this is one of the positive lessons we will have learned following the pandemic.

[1] https://www.oecd.org/gov/digital-government/recommendation-on-digital-government-strategies.htm

[2] “The future of work in Latin America and the Caribbean: how to guarantee workers’ rights in the digital era? From IDB https://publications.iadb.org/es/el-futuro-del-trabajo-en-america-latina-y-el-caribe-como-garantizar-los-derechos-de-los-0

[3] For more information, see https://www.teletrabajo.gov.co/622/w3-channel.html

[4] Quarantine debunks a myth: teleworking showed that control does not increase productivity. https://www.iproup.com/innovacion/13210-teletrabajo-mostro-que-el-control-no-incrementa-la-productividad

[5] France and Spain were pioneers in creating legislation on digital disconnection (Law N° 2016-1088 and the 2018 Law on the Protection of Data and Guarantee of Digital Rights, respectively).

[6] OIT Eurofund – Working at any time and in any place: consequences in the working sphere. 2019. The report synthesizes the research carried out by the network of European correspondents of Eurofund in ten member States of the EU –Belgium, Finland, France, Germany, Hungary, Italy, Holland, Spain, Sweden and Great Britain– and ILO consultants Argentina, Brazil, India, Japan and the United States.

[7] Idem note 6

[8] The Tax Administrations and Information Systems for improving control. Some Iines on the subject. CIAT Blog 29/7/2019.

[9] For example, article 114 of the CIAT Model Tax Code provides that the confidentiality of the equity data of the individuals is guaranteed through provisions included in the Code which provides for secrecy of the information entering the TA and a penalties system for the officials and entities using it for purposes other than the collection ad examination of the taxes.

(10) To expand this topic, we recommend that you review the recent book: ICT as a Strategic Tool to Leapfrog the Efficiency of Tax Administrations/ 2020 which deals with various aspects of security of the information.

(11) By way of example, the telework legislation in Colombia provides different recommendations on cybersecurity. https://www.teletrabajo.gov.co/622/w3-article-126328.html