E-tax rollout postponed again

24 April 2019 | Economics

The finance ministry introduced a new electronic income-tax filing system in January, but deadlines are repeatedly being postponed.

The date when the new system must become operational has been delayed by a seemingly ineffective system.

Experts are critical of an apparent lack of project management, which usually provides a systematic introduction in stages, with the old system running parallel to the new one as a back-up.

Yesterday morning, the ministry announced that the monthly declaration of pay-as-you-earn (PAYE) deductions, which employers had to make from 1 April, has been postponed to 20 September 2019.

The 30 June deadline for the submission of individual tax returns remains unchanged, but it will have to be done manually as in the past.

The Receiver of Revenue had instructed businesses to declare each employee's tax deduction monthly from the beginning of the new fiscal year.

According to the Receiver, most companies were not ready to make these declarations.

But sources in the business community say in principle these declarations do not pose any challenge, as any electronic payroll system provides data on individual tax deductions. They say the problem is more likely that the ministry required the data in a format different from those used by payroll programs used in the private sector. In an attempt to solve the problem, the finance ministry created an Excel spreadsheet, which companies were expected to fill in by copying and pasting data entries.

Some professionals fear this will expose the tax system to fraud.

Meanwhile, taxpayers are unsure what to do as the deadline for tax returns draws nearer.

The revenue office has repeatedly reminded all registered taxpayers to register on its internet portal, called the Integrated Tax Administration System (ITAS).

According to experts, no individual is obliged to register electronically, nor is it obligatory to file income tax returns electronically.

They say even the business community is not obliged to do so yet, but will eventually have to switch to the electronic system.

In the case of companies, ITAS provides a fully integrated system to control employees' tax deductions, value-added tax (VAT), and the tax liability of each company and its owner/s.

Therefore, at the beginning of the year, the tax office had also requested that future VAT periods and declarations be aligned with the company's financial year-end.

Again, treasury backed off when this turned out to pose a massive challenge to various businesses' cash flows. The backlash was accompanied by a promise that there would be no fines for outstanding VAT payments. Here too, many experts have their doubts, because if the system has to be constantly rewritten and adjusted, it is reasonable to assume that a perfect storm is brewing, where people will be inundated by demands and penalties.

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