Digital tax collection tools: ACCA wants tax authorities to recognise implementation risks

As tax administrations continue to look for latest technological developments to assist in the task of effectively collecting taxes from the population, the Association of Chartered Certified Accountants (ACCA) has said tax authorities must recognised risks in the implementation of digital tax collections tools. The current shift in the digitalization of the global economy is an opportunity presented to national tax collectors to make a change in the efficiency of their processes. Just as digital tools can benefit tax administrations, the development and implementation of technological innovation in the private sector is a constant race to improve performance. According to its most recent report: Technology tools and the future of tax administration, the Association of Chartered Certified Accountants) urge tax administrators to manage the risk of imposing restrictive technological requirements on taxpayers. At the extreme regulatory constraints could deprive businesses of the opportunity to exploit the most economically efficient technology, stifling competition and even growth. Tax authorities face the additional burden that their systems must work for every taxpayer stably and predictably. As a matter of sheer practicality, tax systems cannot evolve continually as businesses do. A single central authority will implement a single central system, which must balance the needs of every taxpayer and will by its nature change infrequently in discrete steps. ACCA’s head of business and tax law, Jason Piper, says: ‘Businesses operate independently, and each will tailor its digital tools to match its circumstances. The constant cycle of technological change means no two businesses will implement identical solutions. Tax authorities may see a benefit in imposing a standardised system which drags the least innovative business into the digital net. However, there is a risk that enforcing these changes will in some cases do more harm than good if they compromise other businesses’ ability to explore all benefits offered by digital tools.’ By Motolani Oseni