Technological advancements are reducing the burden of tax compliance on businesses, according to a new report by The World Bank Group and PricewaterhouseCoopers (PwC).
The report looked at the ease of paying taxes in 190 economies. It revealed that both the time and number of payments needed to comply have dropped, due largely to the increasing use of technology.
The time to comply declined by 5 hours to 240 hours and the number of tax payments fell by one to 24, the report said. The time needed to comply with labor and profit taxes fell by 2 hours (to 61 hours for profit taxes and 87 hours for labor taxes), compared to last year.
The time it took was reduced by electronic filing and payment, improved tax, and accounting software and pre-populated returns.
Further, the decrease in tax payments is due to increased online filing and payments capabilities, new web portals and the greater use by taxpayers of online systems.
“Technology’s impact on reducing the administrative and cost burden of tax is almost universal this year in our findings,” Andrew Packman, leader for Tax Transparency and Total Tax Contribution at PwC said. “In particular, it is now embedded in driving simplification and time-saving for business. The increasing use of real, or near real-time data is changing how tax authorities can use data, and analyze returns. This does, however, raise questions about data integrity and security and about how businesses can meet the increasing data obligations placed upon them.”
Rita Ramalho, acting director of the Global Indicators Group, Development Economics at World Bank Group, said this trend is welcome news.
“The use of technology can provide significant benefits for both taxpayers and tax collectors, and we look forward to its increased use in efforts to improve the ease of doing business for medium-sized enterprises in countries around the world,” Ramalho said.