World Bank Group                                             1




                   A new tax system
                   for the XXI
                   century?
                       How disruptive technologies are
                          changing the way tax systems are
                          administered
     World Bank Group                                                                                                2



     Outline
  Digital            Technological            The transformational                   The New                  Data
 Economy                trends                        path                            Wave                   Quality

Where do we stand?   That change the way      Road map to a full digitalization   Of technological change.   Key element for
DE Is becoming the   tax administrations go   of tax administration               Block Chain, Big Data,     full potential
economy itself       about their business                                         Machine Learning
                                                                                                                                 3
                                                 The digital economy is becoming the
                                                     economy itself (OECD, 2015)
A new tax system for the XXI century?




                                        Key features from a tax
                                                                    The DE has accelerated      •DE raises tax challenges
                                        perspective: Mobility,
                                                                    and changed the spread      for policy makers (nexus,
                                        reliance on data, network
                                                                    of global value chains in   data, VAT collection…)
                                        effects, the spread of
                                                                    which MNEs integrate        and for revenue
                                        multi-sided business
                                                                    their worldwide             administration.
                                        models (e-commerce,
                                                                    operations
                                        app stores, cloud
                                        computing, participative
                                        networked platforms…)                                                       World Bank Group
Covid-19 has made digital transformation a matter of necessity!

One big lesson from the Covid-19 pandemic: The criticality of internet-based compliance and payment
platforms for revenue administrations.

Where such platforms existed, the negative impact of Covid-19 on revenues was not a function of
administrative factors but restricted to economic factors

The ability of revenue administrations to maintain business continuity in a pandemic emerged as a critical
element of success.

Countries had different starting points and hence, varying levels of readiness to face the Covid-19 pandemic
crisis. Low-capacity environments faced the most difficulties in keeping revenue administrations fully functional,
suffered the most in terms of revenue declines. Higher capacity revenue administrations minimized the
disruption of revenue collection efforts.

Please see: “Covid-19: Revenue Administration Implications, The World Bank Group, April 2020�



                Accelerate the move to a digital revenue administration
World Bank Group                   5




Tech Trends
that Change a Tax Administration
                                                                                DATA ANALYTICS


Road to
                                             USE OF DATA TO                                                     THE FUTURE:
                                                                                RISK BASED
                 BASIC E-TAX                 STRENGTHEN                                                         “DIGITAL BY
                                                                                PROFILING; REAL-
                 ADMINISTRATION              ENFORCEMENT; E-                                                    DEFAULT� TAX
                                                                                TIME HORIZONTAL


a High-
                                             SERVICES EXPANDED                                                  ADMINISTRATION
                                                                                MONITORING




Tech
Digital Tax       High speed internet
                  available. E-filing, e-
                                            Tax administration has data
                                            warehouse. Third party
                                                                            Tax administration is rich in
                                                                            data resources. Third party
                                                                                                              Tax administration is “digital
                                                                                                              by default�. High quality

Administration    payment. Other basic
                  e-services.
                                            structured data available. E-
                                            services expanded, include e-
                                                                            structured and un-s data
                                                                            available. Data analytics (Big
                                                                                                              taxpayer user experience. E-
                                                                                                              assessment, algorithm based.
                  Rudimentary risk          submission of tax relevant      Data) successfully used. E-       Predictive Data analytics,
                  assessment                source data Widespread use      auditing: analyzing data in       Artificial Intelligence. User-
                                            of e-platform                   digital format. Full gamut of e   centric design, tailored
                                                                            services available. Horizontal    engagement. Smart portal
                                                                            monitoring programs for LTs       solutions, mobile apps
                                                                                                              Blockchain solutions? Cloud
                                                                                                              services?
                                                           Tax
                                                           Administration
A new tax system for the XXI century?




                                                           Digitalization
                                                           Beyond the mere adoption
                                                           of new tools and
                                                           technologies.
                                                           A real Tax Administration Digitalization involves a
                                                           comprehensive institutional transformation. Encompassing
                                                           all required adjustments to traditional operational models
                                                           with the purpose of developing new capabilities, achieve
                                                           long-term and sustainable efficiencies and offer new and
                                                           improved services to the taxpayer.




                                        World Bank Group
World Bank - SCC                                                        8




                   Data Quality:
                   How to exploit
                   the full
                   potential
                   Data Quality is now more important than ever before.
                   According to Gartner (2011), poor data quality is the
                   primary reason why 40% of some administrations’
                   initiatives fail to achieve their targeted benefits.




                                                           World Bank Group