Strengthening the economy through tax Digitalization
- 29 Apr 2021
The Covid-19 pandemic has highlighted the need for agility. Agility and adaptability are the name of the game for governments and big enterprises to survive in the ever-changing world. When it comes to tax management, the need for digitization is felt strongly across all stakeholders. A digital tax regime is easy to access, induces higher accountability, and ensures compliance.
Tax avoidance and evasion have remained a pain point for African Nations. The Organization for Economic Cooperation and Development (OECD) has calculated that Africa faces annual losses of up to $50 billion to the issue. This is more than the aid offered to Africa during the same period. This lost money can easily translate into public health, sanitization, public schools, and better infrastructure.
The African countries are being cheated of billions of dollars in tax revenue by large foreign companies. Even medium and small-sized organizations find their way out of paying taxes by forming shell companies in tax havens. These evasions, combined with the impending global recession, places renewed emphasis on the need for proper revenue strategy.
The situation has put the tax administrators in a pinch. They need to undertake emergency and everyday businesses while complying with mandates of social distancing. The situation calls for an intense and rapid move towards tax digitalization more than ever.
Many low-income economies find it challenging to collect enough taxes to cover state expenses, let alone run the country on it. The situation got worsened further by a pandemic and mistrust between authorities and citizens. Tax digitization instills trust in citizens for the state, as it increases accountability.
Not far from the West African region, the country of Kenya in East Africa tried to spearhead tax digitization at the beginning of 2020. When the crisis struck, the people were already getting the hang of the system. Their relative familiarity with digital tax payments led to increased tax collection even during the global pandemic.
The Kenyan revenue authority was also able to rely on its digital systems to gain real-time data and statistics on pandemic-related consumer spending shifts. These insights helped the authorities take predictive measures and ensure hassle-free expenditures and foresee the impact on revenues.
Tax digitization helps governments strengthen the economy and ensure smooth working of the revenue authorities. Many economies, especially the economies of developing countries, rely heavily on the taxes collected. So, having a detailed account of the collection and expected expenditures is imperative.
However, undertaking such an assignment is a massive task. Digiflynt helps governments undertake the task of tax digitalization with ease. Our team helps you seamlessly adopt digital taxation. We help you to not only process taxpayer’s data but to ensure compliance, efficiency, and policies.
The process of digitalization helps broaden the tax base by identifying defaulters. A data-centric approach will help you identify loopholes and gaps in tax collection and increase big enterprises’ compliance. A digital system enhances transparency and accountability, bridging trust between the government and citizens. A robust tax collection will help boost economic growth, leading to social development and uplifting its living standard.