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Invenio Signs Agreement with Department of Zakat & Income Tax, Saudi Arabia for Implementation & Support of SAP Tax and Revenue Management System

RIYADH, SAUDI ARABIA – 18 August 2014. Invenio today announced signing of an important agreement with the Department of ZAKAT and Income Tax (DZIT) in Riyadh to develop and modernise their automation systems for Zakat and Tax Automation System (ZTAS). This agreement was signed on behalf of the Department of Zakat and Income Tax by Deputy Director General for Supporting Operations, Saleh Al-Awaji and Invenio’s Managing Director, Partho Bhattacharya. Saleh Al-Awaji explained (translated): “The importance of this agreement, is to bring state-of-the-art technology by implementing SAP Tax and Revenue Management (TRM) system.

This development and modernisation project, awarded to Invenio Business Solutions seeks to keep DZIT up-to-date with the latest and best applications used in the field. Noting that the agreement is of great importance and will provide DZIT a quantum leap in eGovernment services. This will facilitate the whole of the taxpayer’s process with DZIT through an electronic portal while ensuring a smooth integration with various governmental entities for exchanging relevant taxation data. In addition to the multiple benefits, the new system will process revenue verification functions and will raise the commitment of taxpayers and reduce the risk of delays in the payment of Zakat and tax incl. the avoidance and fraud in general.”

DZIT_ParthoPartho Bhattacharya concluded: “Invenio is greatly privileged and grateful to be awarded this important work to modernise Saudi Arabia’s Zakat & Income Tax systems. The new system will provide the Kingdom of Saudi Arabia an ability to deploy appropriate Zakat & tax management flexibly as the economy develops further to other key focused developmental areas of the Kingdom and collaborate with other Government agencies and other developed economies’ tax agencies. Invenio will provide the world’s most popular German business system SAP and the best of British consulting skills collaboratively with DZIT to achieve a successful business transformation.We do expect this new modern system will be an ideal example for other GCC countries to follow.”

 

Media Contact:

Silviya Savova

+44(0)330 440 1800

silviya.savova@invenio-solutions.com

How Tax Agencies can use Big Data

Tax_Fraud_TechTax authorities these days face challenges across the board, but recently tax evasion, fraud, insufficient taxpayer compliance and data overload are the main topics addressed by international media. With the availability and sourcing of data and information, more and more,
people and organisations believe in data analytics to gain value out of Big Data.

Since increasing data volumes are available for tax agencies they must consider new ways , to analyse this data and to address the challenges it brings.

The volume of data produced in recent years could possibly be described as an ocean of data and to look at the analytics, as searching for ‘fish in a big ocean!’ The tax inspectors are searching out these ‘fish’ (pieces of data).

The need for tax inspectors to understand analytics is mandatory and a valuable skillset needed by governments and assess and also, to identify the answers to some of the following questions:

  • What data sources are available to address key issues, such as tax evasion?
  • What interfaces are required to update the data on a regular basis?
  • What are the costs of having the data available in comparison to the potential tax recovery?
  • How can the available data be merged to address specific needs e.g. auditing requirements?
  • What are the hidden relationships between corporate and individual taxpayers?
  • How can the data be visualised?
  • How to support risk assessments and taxpayer creditworthiness in data processing?
  • Does the data also support digital foot printing to generate taxpayer profiles?

The questions above are indicative and reflect only some of the potential topics that need to be addressed and the requirements with regards to legislation. Nevertheless, the answers to the given questions are not easy to give as special analytical skills and tools are required to retrieve the business value out of the available data to tackle the challenges and to meet the information needs.

Although a variety of tools have been around for some time, the way in which public sector organisations are using these systems is changing. Developments in mobility and cloud computing, together with improvements in communication infrastructures and data security means that tax officers can now access Big Data anytime and anywhere.

In the context of tax authorities, for example, it’s now perfectly feasible to equip field-based tax officers and remote compliance inspectors with real-time information – making their jobs more efficient, and improving overall job effectiveness. Office-based tax officers can now visualise and drill down into a much deeper range of data more quickly and efficiently than ever before. The technology enables them to analyse taxable operations based on a larger volume of tax returns, external information and a variety of other detailed taxpayer data in real time.

Invenio’s Public Sector practice is uniquely placed to offer a rapid, efficient and cost effective deployment of SAP Tax and Revenue Management solutions. Invenio helps Tax Agencies to create a stable foundation for the entire tax management lifecycle across all tax types to aid efficiency of the entire collection process. SAP Fraud Management has been designed as a platform solution to prevent fraud and non-compliance in various areas tackling the large volume of tax related data. The analytical tools and reporting capabilities enable tax authorities to gain value from the processed data to increase recovery rates on a wider scale. For more information, please contact us.

The Top Three Challenges in Tax and Revenue Collection

martinCreating a sustainable tax system that can collect tax in an easy, efficient and cost effective manner is a goal that many Central Governments around the world share. To improve efficiency and reduce costs the UK Government have recently released a digital strategy outlining 25 services which will be improved with the use of digitisation. The 25 points include a number of items such as, land registry, power of attorneys, student finance and more. In the Government’s Digital Efficiency Report a huge £1.8 billion was identified in potential savings by increasing digital transactions to 82% of total Government transactions.

With this in mind, we take a look at the specific role of digitisation in tax and revenue collection. Below, are some of the top challenges that face modern Government administrations today, with suggestions on how the right technology can improve digital processes to reflect the needs of the modern taxpayer and help make tangible savings across the revenue collection process.

1. How do we make things easier for the taxpayers?
One way to improve efficiency in digital tax and revenue collection is to make the online process easier for the taxpayer. By deploying technology that is specifically designed to address tax collection within the digital era, revenue agencies can:

Simplify – Reduce the administration burden on the taxpayer through guided, automated online workflows.
Assist – Address specific taxpayer queries more efficiently through context-sensitive help, and use workflows to channel queries to the right people and departments for improved response times.
Engage – Improve taxpayer services through the proactive management of taxpayer or constituent relationships through e-reminders, notices and triggered alerts.

By linking all of the above, digital services can run 24/7 so taxpayers are able to pay the right amount of tax, at the right time with minimal revenue agency intervention.

2. How do we reduce internal costs?
The potential for Governments to make massive cost reductions to their internal costs by
reduce_costs “going digital” have already been identified.

Here are four key areas that savings can be made with the right technology infrastructure.

Improve – Rationalise, decommission and upgrade outdated technology for better system efficiencies, enhanced workflow and a modernised technology infrastructure.
Equip – Issue staff with the right tools and information that will help them do their jobs more efficiently and effectively
Automate – Streamline, improve and automate tax collection and calculation processes whenever possible
Reduce – Minimise the carbon footprint by reducing consumable costs through digitisation

3. How do we improve collections and compliance?
Digitisation can help close the gap between taxes owed and taxes collected. Below are three ways that technology can help:

Self Service – Promote voluntary compliance and convenience through easy to use “always on” self-service models
Act – Deploy high performance analytics to uncover, track, analyse, and address non-compliance quickly and effectively
Adapt – Leverage data to research and improve compliance measures and better customise taxpayer services

For decades, SAP Tax and Revenue Management solutions have helped hundreds of collection agencies around the world to improve constituent services and revenue collection efficiencies. SAP’s focus on delivering the right technology for an increasingly digital world has seen them become the world’s fastest-growing enterprise cloud companies.

With the SAP Cloud portfolio, tax agencies have the agility and confidence to deliver services in a way that suits their citizens’ needs, particularly in terms of security and reliability — whether completely in the cloud or on premise or in a hybrid form. Cloud solutions are driving transformation across the private sector, and innovative government agencies that embrace them can fuel meaningful change in the way government business is done achieving cost reductions.

The public sector will continue to seek new and innovative ways to reduce cost, and improving efficiency in the highly complex world of tax and revenue management is an important factor in achieving this goal. Meeting the challenges of the digital era needs the right technology and systems to serve as the backbone that supports a digital strategy. And the right technology, such as an SAP platform, can create a strong foundation for improving and building upon current digital processes. SAP technologies continue to evolve and these, along with the service capabilities of SAP Gold Partner, Invenio, means that technology modernisation programmes today will not only help digital efforts now, but will serve to help government organisations to adapt and improve as the digital landscape evolves.

For more information on SAP Tax and Revenue contact Martin Sobotka Direct.

Isle of Man Leads the Way with Signing of new UK Tax Agreement

The Isle of Man has become the first British dependent territory to sign an agreement with the UK Government that extends the automatic disclosure of tax information. Under the accord, the two Governments have agreed to start exchanging information from 2016 on residents’ tax issues. This new deal will extend the current agreement which sees the Isle of Man already sharing information on personal savings income with the UK and other European Union countries.

Allen Bell, the Manx Chief Minister said: “In signing this historic agreement with the United Kingdom we are underlining the message to our neighbours and the wider world that our Island is a responsible centre for top quality international business”. He added: “Today’s signing is a significant step towards that global standard and further proof that the tax haven moniker in relation to the Isle of Man is well and truly dead”.

The UK Government is also seeking to agree a similar deal with the two other dependent territories of Guernsey and Jersey, although at the time of writing, neither has confirmed participation.

Regardless whether or not the term “Tax Haven” is fair, it is clear that many countries are stepping up efforts to force jurisdictions to reveal information on clients suspected of tax abuse. Earlier this year, The Financial Times reported that France has stepped up its assault on tax havens by blacklisting Bermuda, British Virgin Islands and Jersey, in a move that will impose heavy penalties on thousands of French individuals and businesses. The three offshore centres have been added to a list of “non-co-operative jurisdictions”, triggering punitive withholding taxes of up to 75 per cent on payments from France.

Why do these agreements matter?

So what is driving the many recent international efforts in curbing tax evasion? It is hard to quantify the impact of tax evasion on a country’s wealth but, given the estimates shown in the chart below, it is clear that fixing this problem would go a long way in helping to assuage the current austerity measures imposed by many governments to help see them through the most severe recession since WWII.

The Guardian recently published an article stating that the amount of tax lost within the UK through non-payment and avoidance increased last year to £35bn, (according to official figures released in October). What is even more shocking is a statement taken from www.taxresearch.org.uk – that tax evasion is costing the world $3.1 trillion a year – more than 5% of world GDP. The chart below is taken from the tax justice networks research into tax evasion, showing the top ten countries that were affected in 2011.

Tax-Evasion

 

Challenging times ahead

With tax avoidance schemes so widespread and disconnected, it is going to be years, maybe decades, before we can see a clear benefit to the new processes and laws that foster increased co-operation. But it seems things are moving in the right direction.

In a previous blog post – regarding the G20 sharing information Martin Sobotka discussed the huge data volumes that will need be processed and analysed. Technologies such as SAP HANA can help to consolidate huge amounts of information from many different sources, and the connectivity across both analytical and transactional systems can help to remove barriers and provide Governments with a key advantage in identifying data inconsistencies when analysing external tax information.

Martin Sobotka is an expert in Tax & Revenue Management solutions across all continents. For several years, Martin worked for SAP Consulting introducing SAP products to City Councils, Federal States and Government Authorities. He is a well-respected expert and focuses on the functional implementation of new SAP technology in this area.

To find out more on this subject you can contact Martin directly.

Global Co-operation in Combatting Tax Avoidance Grows…

According to a report by British accountant, Richard Murphy, tax evasion equates to some 18 percent of global tax collections. And, says Reuters correspondent David Cay Johnston in his blog post Where’s the fraud Mr President “Murphy’s $3 trillion estimate, 5 percent of the global economy, shows how a combination of weak rules on accounting and disclosure combined with inadequate budgets to enforce tax laws impose a terrible cost on honest taxpayers and the beneficiaries of government service”.

There are many types of tax avoidance that make up this estimate – some legal, many illegal – and, if recent reports are anything to go by, Governments are committed to increasing international cooperation to tackle the issue on a global scale…

China recently announced it has agreed to join the international effort by the Group of 20 leading economies (G20) to combat tax evasion by signing an agreement to share tax records. China’s decision means that all G20 countries now have agreed to cooperate on tax avoidance, a priority set by global leaders to address the causes of the 2007-2009 financial crisis and to help combat corruption.

The move follows the announcement in July 2013 which saw Finance Ministers from the G20 formally back plans to tackle international tax avoidance and evasion. The G20 has asked the OECD to come up with a plan to improve tax cooperation, with the Finance Ministers saying they “fully endorse the OECD proposal for a truly global model” of information sharing. The statement called on all countries to make automatic information sharing a reality “without further delay”, adding that “capacity-building support” would be provided for poorer nations.

One driver for this increased cooperation is the recent string of news headlines that allege many multinational firms are legally avoiding tax through the use of loopholes and tax havens. Recent high profile cases in the UK include firms such as Apple, Google, Amazon and Starbucks who have all been heavily criticised for the amount of tax they pay in the UK. Although these companies are at pains to point out that these schemes are legal and they have a duty to shareholders to minimise their tax bills, the proposed new rules, and improved cooperation between nations could see global giants paying more in the countries where they do business.

Tackling Fraud with SAP

A problem that’s just as difficult to address for Tax Agencies is that of individual or small-scale illegal fraud that can be difficult to detect. A recent article in Bloomberg’s Business Week about the world’s largest shadow economies (defined as “parts of the economy involving goods and services which are paid for in cash and not declared for tax”) said: “…in 2007, in 162 countries, an average of 35.5 percent of official gross domestic product slipped through the cracks—not counting any fruits from such illegal activities as drug dealing or organized crime”.

This kind of tax evasion not only damages the reputation of government agencies, but it also contributes heavily to ever-increasing budget deficits. Paying taxes is a cornerstone of a healthy economy and a “shadow economy” means Governments often lack the revenue they need to provide adequate public services.

With more and more citizens avoiding taxes by operating their businesses “off the grid”, advanced fraud detection technologies are becoming an increasingly popular method used by Tax Agencies to help combat the problem. SAP Fraud Management, for example, was announced by SAP in March 2013. In its announcement SAP said: “The solution can help Tax Agencies to reduce fraud and non-compliance by cross-checking tax returns or social service applications against millions of related data records in real time – giving tax officers increased capability to spot whether submitted applications match information from other data sources. By further applying predictive algorithms from SAP HANA on a large number of transactions, Revenue authorities can uncover hidden fraud patterns and produce alerts on suspicious transactions that might be missed by conventional fraud and compliance rules”.

The development of technologies that can assist Governments in analysing data on such a huge scale will be welcome news for those struggling to manage the deluge of data brought about by digitisation. John Schweitzer, senior vice president and general manager, Analytics, SAP said. “SAP Fraud Management powered by SAP HANA will enable enterprises to detect, investigate, prevent and monitor irregularities or fraud in environments with ultra-high volumes of data, from both SAP and non-SAP systems. With SAP HANA as its backbone, SAP Fraud Management aims to bring unprecedented processing capabilities.”

Improving the Collection Process with SAP Tax and Revenue Management

Invenio’s Public Sector practice is uniquely placed to offer a rapid, efficient and cost effective deployment of SAP Tax and Revenue Management solutions. Invenio helps Tax Agencies to create a stable foundation for the entire management of the tax and revenue management life-cycle across all tax types to aid efficiency of the entire collection process.

Tax Evasion, is SAP Tax and Revenue Management the Answer?

Curbing tax evasion has long been a priority for Governments globally, with Revenue Collection Agencies using increasingly sophisticated methods to detect possible fraud and recoup monies owed to help close the tax gap. Industry solutions like SAP Tax and Revenue Management can help Revenue Authorities to increase efficiencies in the collection process, but what else are Governments doing to help recover taxes owed?

As part of the British Government’s 2010 Spending Review, it was announced that an investment of £917 million would be made available to help tackle tax avoidance, evasion and fraud. This investment enabled the UK’s Tax Agency (HMRC) to increase the number of people focussed on these areas, enhance their skills, expand the use of third party data and develop tools that would help identify even the most hidden forms of tax evasion. In December 2012, the British Government reaffirmed this commitment by investing a further £77 million in HMRC avoidance and evasion work. This investment, it seems, is starting to pay off…

Earlier this month The Financial Times reported that the number of criminal prosecutions for tax evasion in the UK had more than doubled over the past year, as the HMRC stepped up its efforts to crackdown on individuals suspected of defrauding the Exchequer. Tax evasion prosecutions rose from 302 in 2011-12, to 617 in 2012-13, according to figures obtained by international law firm, Pinsent Masons. This increase, says The FT, reflects a pledge made by the British Treasury in 2010 to increase the number of tax prosecutions fivefold, in an effort to create a more robust deterrent against tax evasion.describe the image
Tax-EvasionDespite this increase in prosecutions, Pinsent Mason also reported that the number of incidences of serious tax evasion (evasion of tax totalling £50,000.00 or more) has actually dropped significantly. Last financial year, local HMRC offices identified 2,888 suspected cases of serious tax evasion – representing a 16% drop on the 3,456 cases that were identified in the previous year. This reduction, they say, was helped by an increase in anti-evasion efforts, including new powers to:

Impose penalties of up to 200% of the original tax owed if an individual does not declare any income or capital gains that has been hidden from HMRC in an offshore bank account.

Create taskforces to help prevent cases of serious tax evasion. For example, the Offshore Coordination Unit (OCU) coordinates HMRC’s analysis of the information it receives on UK taxpayers who have money concealed in overseas deposits.

Use ‘private sector’ experts to improve HMRC’s strategy and use of data to identify possible tax evasion.

Deliver high profile advertising campaigns which are designed to heighten evaders’ discomfort about not declaring all of their income.

An increase in the number of treaties with other countries is also thought to be assisting in efforts to catch tax evaders who hold their assets in offshore accounts. This includes deals with the governments of both Liechtenstein and Switzerland. Phil Berwick, Partner at Pinsent Masons said: “International co-operation has been stepped up significantly as HMRC strives to curb tax evasion. Tax evaders are now realising that HMRC has a much greater ability to tackle evasion, even if individuals conceal their assets abroad.”

Improving the Collection Process with SAP Tax and Revenue Management

Invenio’s Public Sector practice is uniquely placed to offer a rapid, efficient and cost effective deployment of SAP Tax and Revenue Management solutions. Invenio helps Tax Agencies to create a stable foundation for the entire management of the tax and revenue management lifecycle across all tax types to aid efficiency of the entire collection process. SAP Fraud Management has been designed as a platform solution to prevent fraud and non-compliance in various areas tackling the large volume of tax related data compiled in tax authorities.