Big Data Analytics in Bangladesh Tax Administration

Transcription

1 Big Data Analytics in Bangladesh Tax Administration Md. Abdus Salam Deputy Commissioner of Taxes National Board of Revenue, Internal Resources Division, Ministry of Finance

2 Background/Rationale The term Big Data has come to refer to very large datasets. In other words, Big Data refers to datasets that are too awkward to work with using traditional, hands-on database management tools. This might be the case for a number of reasons including limitations in traditional methods ability to capture, store, manage or analyze data on the scale in question. Whereas the term Big data analytics refers to the process of examining and interrogating big data assets to derive insights of value for decision making. The world s capacity to store, broadcast and compute information is growing exponentially. This Big Data revolution is arguably one of the most important global trends for the coming decade. The opportunity for public service transformation is real through Big Data. For citizens, the application of data, technology and analytics can cut paperwork, get questions answered more quickly, help people find and claim the benefits they are entitled to. 2

3 Background/Rationale (cont..) Chris Yiu,

4 Background/Rationale (cont..) At a macro level, Big Data may create scope to improve the overall efficiency of government operations, to accelerate efforts to reduce fraud and error, and to make further inroads into the tax gap. It has been estimated in UK that achieving cutting-edge performance could in time save the public sector up to 16 billion to 33 billion a year equivalent to 250 to 500 per head of the population. (Chris Yiu, 2012) Big Data analytics can have a real and direct impact on the way policymakers work and citizens interact with governments. 4

5 Introduction The National Board of Revenue (NBR) is the apex national tax policy and tax collection and tax systems administration agency of the Government of the People s Republic of Bangladesh (GOB). The NBR is responsible for end to end oversight and superintendence over both direct taxes as well as indirect taxes. These include Income Tax, Value Added Tax (VAT) and Customs. Bangladesh s tax-gdp ratio is still at 11.2% which is quite low when compared with other similarly placed countries in South Asia. Furthermore, less than 1% of the population pays income tax and tax evasion is persistent. 5

6 Revenue Administration Ministry of Finance Finance Division Banking Division Internal Resources Division External Relations Division National Board of Revenue Taxes Appellate Tribunal National Savings Directorate

7 Income Tax Administration M OF IR D NB R Administration wing Research & Statistics wing Income Tax wing Customs wing Value Added Tax wing AJCT (Appeal) AACT (Appeal) CT (Appeal) Judicial Executive Income Tax Authority Deputy DG Joint DG Additional DG CT/DG IT EACT ACT TRO DCT JCT Addl CT CT(LTU) Deputy DG Joint DG Additional DG DG(Training) Deputy DG Joint DG Additional DG DG(CIC) IT EACT ACT TRO DCT IJCT IAddl CT CT(Taxes Zone)

8 Introduction (cont..) One of the reasons that has been cited by policy analysts for this underperformance is NBR s manual business process. On the other hand, the modern world generates a staggering quantity of data and the business of government is no exception. Across the public and private sector, extraordinary quantities of data are amassed in the course of running public and private services. In response to these challenges, as part of the government s Digital Bangladesh agenda, the NBR has undertaken several initiatives on automation of its tax processes to improve its efficiency and provide better taxpayer service. In this respect, the NBR is also being supported by several bilateral donors and the multilateral organizations on reforms on tax policy as well as administration. 8

9 Utility of Big Data Countering non-compliance, fraud and error Transforming and personalizing the citizen experience Developing more detailed and/or interactive, personalized tax and benefits. Evidence based policymaking is an oft-repeated Whitehall mantra; big data analytics can help embed this in the culture where previous efforts have failed. 9

10 Utility of Big Data Big data technologies make it possible to set up smart, sophisticated organizations and deliver rich, personalized user experiences. As customers, many of us experience tailored services and optimized business processes backed by big data on a daily basis. Real Time management Information: Data on inputs, outputs, productivity and processes can all be captured and recalled in more comprehensive detail than ever before 10

11 Challenges Big data technologies alone are not, however, a silver bullet for transforming the public sector. Underlying data issues like quality, standards and bias still need to be recognized and addressed. Governments will also need the courage to pursue this agenda with strong ethics and integrity. It also poses new challenges on civil liberties and privacy that must be dealt with, and raises the bar on the talent and capability required in the public sector 11

12 Challenges There are some significant new challenges faced specifically by NBR when driving towards digital transformation which includes constraints in public policy and legislation; the levels of citizen education and skills, and gaps in the authority s own capabilities; assuring the security of information to maintain public trust, this includes key elements such as identity management and cyber security issues; managing the large scale of operation involved. It also poses new challenges on civil liberties and privacy that must be dealt with, and raises the bar on the talent and capability required in the public sector 12

13 Salient features of the NBR modernization plan Significant growth in revenue performance through widening and deepening of the existing tax base across all the three taxes. Enriched and enhanced taxpayer experience through an array of easily accessible taxpayer services available at multiple remote/ customer facing touch points. Reducing compliance cost for the taxpayer by reducing unnecessary paper works and contacts between tax administration and taxpayers thereby establishing a regime that makes the relationship between the tax departments and the honest and diligent taxpayer incident free. Shifting tax compliance management from the traditional subjective audit selection approach to a computer assisted intelligent selection approach based on efficient data mining and revenue risk management tools. Setting up an efficient, integrated national tax accounting network that will correctly account for, reconcile and record tax payment information at a transactional level for all the three taxes and make visible this information in real time basis to taxpayers and to all stakeholders including GOB, NBR, tax officers, Bangladesh Bank and taxpayers. 13

14 Current Initiatives 14

15 Integrated Revenue Management Program-Automation of the Tax Process This component includes the automation of the different wings of the NBR. A key part of this is the allotment of Taxpayer Identification Number (TIN) and Business Identification Number (BIN). The other major components are the setting up of an NBR Data Center, Centralized Processing for Income Tax and VAT Returns, Tax Information Network and installing a Integrated Tax Administration Software that would help tax officials perform their functions in a computerized environment. 15

16 Integrated Revenue Management-Business Process Though Income-tax, VAT and Customs Departments function under the NBR, there is very little data inter-change among the three tax departments and the possible synergy among the three is entirely absent. An integrated revenue management program seeks to connect the three departments at transactional level by linking the taxpayer identification numbers i.e. TIN and BIN in the data base. Hence it makes good business sense to create a data mining facility with modern risk management techniques to enforce better tax compliance. The methodology for setting up such an integrated system is to first centralize the data base and transaction processing of the three departments at one location and then to build an information system that can mine data in the three data bases and thereafter process the same for exception reports. 16

17 Direct Tax Modernization Program The policy content of the new Direct Tax Code will put in place an efficient and modern direct tax regime in the country. This is sought to be achieved by making it simple for the honest taxpayer to meet his/her tax obligations with minimum inconvenience and with no additional compliance cost. This will be achieved by a strong and efficient third party reporting system. This will enable an integrated platform for capturing, analyzing and disseminating information after identifying logical inconsistencies between such information and information reported by a taxpayer in his/her tax return. Tax administration reforms will segregate and consolidate non-customer facing non-discretionary, high volume mass tax tasks in a centralized processing centre for efficient processing and closure. 17

18 NBR Data Centre The NBR will set up centralized hardware architecture to cover the whole country. This will establish a Primary Data Centre (PDC) at the data centre of the Bangladesh Computer Council in Dhaka. This will serve as a backbone for ICT for the NBR and this in turn will be linked to client machines across all locations covering the three taxes under the NBR. The data centre and the network are intended to be established through a Systems Integrator (SI) Project, possibly under a BOT model. 18

19 Tax Information Network Under this project, it is planned to establish an integrated tax accounting system which will be able to verify tax payment claims against actual receipt by the government in banks, consolidate tax accounts and support field formations with accurate tax payment information online. The Tax Information Network would allow taxpayers to have real time access of their tax accounts and automatic crediting of refunds to their bank accounts. This would considerably reduce compliance costs of taxpayers as they would have less need for costly accountants to ensure that their tax records are in order or, having to visit the tax office from time-to-time. 19

20 Integrated Tax Administration Software (ITAS) Project The Tax Information Network, the Centralized Processing and the Data Center are key ingredients to generate the required data for tax administration to function. There is a need for front-end software that would take this data and provide for risk based audit modules for audit, managing tax assessments, manage tax appeals and adjust tax liabilities, prepare reports for senior management, manage the HR, etc. The Integrated Tax Administration Software Project will look for customized or off the shelf solutions to address these issues. 20

21 Recommendations A new Advanced Analytics Team should be established in the NBR, with responsibility for identifying big data opportunities and helping departments to realize them. Government should adopt a Code for Responsible Analytics, to help it adhere to the highest ethical standards in its use of data and analytics. NBR needs a robust and secure Digital Platform as the technical foundation for truly agile digital delivery. Such a Digital Platform should also allow a business to create innovative digital services NBR also needs to put in place new ways of working, such as those relating to data governance and master data management for data quality. This quality will be important as the value of data grows in tune with an increase in the use of analytics for identifying and stopping fraudsters and tax evaders. 21

22 Conclusion The age of data and analytics has already started to fundamentally transform the way that tax policy and administration are planned and executed. Looking ahead, new advances and applications for data and analytics, combined with increased demand for cross-border information sharing, are expected to drive further-and more significant-change within tax systems around the world. As the pace of change is so rapid, the challenge for Bangladesh NBR is to be ready for this new world. 22

23 Thanks for your kind Attention Md Abdus Salam National Board of Revenue, Internal Resources Division, Ministry of Finance