Digitization has streamlined tax administration in various jurisdictions. In Hong Kong, the Inland Revenue Department (IRD) launched eTAX in 2008, offering taxpayers a simpler, quicker, more secure and environment-friendly way to settle their tax obligations through electronic means.
Yet, ten years later, 60 percent of taxpayers still use the traditional method of filling up paper forms to manage their tax affairs, while 45 percent have never used the government’s e-filing services to file tax returns, according to a survey conducted by top accounting firm Ernst & Young (EY).
“Hong Kong can accelerate its pace in the progress of digitizing tax services and administration,” said Agnes Chan, managing partner for Hong Kong and Macau at EY.
Citing figures from the IDR, Chan said since the launch of eTAX in 2008, the number of Hong Kong taxpayers who opened an account with the online platform has risen from 80,000 in the first year to about 800,000 this year.
They now account for about 30 percent of the city’s 2.6 million taxpayer population. However, compared with about 90 percent of the population in other developed countries such as the United Kingdom and Singapore who use electronic means to manage their tax affairs, Hong Kong still has room for improvement.
According to EY, the digitization of the city’s tax administration should be considered highly feasible as the majority of local taxpayers, based on the survey results, demand an electronic and more interactive option to settle their tax obligations.
Introducing a web chat service, or even an around-the-clock chatbot service, that could be accessed via mobile devices could be a way to meet the appetite, EY said.
In addition to promoting a higher uptake of eTAX accounts and usage, the firm also recommends that the government relax the e-filing eligibility for companies.
At present, e-filing of tax returns is only available for businesses with turnover of no more than HK$2 million.
Paul Ho, EY’s financial services Hong Kong tax market leader, said an overwhelming majority of businesses would like to have this service extended to cover all companies. “This would greatly minimize the administrative efforts in preparing, reviewing, signing and submitting paper returns,” he said.
In 2003, Singapore rolled out “SingPass”, a single digital identity for its citizens that allows them to access all government e-services. Hong Kong, too, plans to provide all residents with an electronic identity (eID), a single digital identity for authentication when accessing government services online. The plan, in fact, is included in the Hong Kong Smart City Blueprint released last year.
Chan agrees the launch of eID will greatly enhance tax administration in the city. But the government can do more to hasten the transition of tax administration from paper forms to an electronic platform.
“We can’t just wait for eID to launch before we promote the eTAX services,” Chan added.
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