Tax Revenue Suite (TRS) Overview

I. Introduction

Tax administrations around the world face numerous challenges including tax evasion, fraud, and substantial tax gaps; limited resources, budget constraints, and outdated systems; growing costs of tax administration, and inefficient tax collection processes.

This document provides an overview of the Tax Revenue Suite (TRS)—the family of digital products that integrates with the core tax administration information system (CTAIS) and provides the following solutions:

• Identifying and closing tax gaps.
• Increasing tax revenues of the state.
• Reduction of administrative costs of tax authorities and taxpayers.

Implementation of TRS products on the national level in several countries demonstrated the following results:

An example of narrowing the tax gap and increasing VAT collection in the B2B and B2C sectors:

An example of the implementation of TRS for C2C and a special tax regime for the self-employed.

TRS includes the following products:

Figure 1. TRS Products.

Tax Revenue Suite (TRS) includes the following set of products:

1. TRS for B2B, B2C, and C2C taxpayer segments (TRS X2X).
2. Digital Desk Audit (DDA).
3. Digital Return-Free Tax Regime (DRF).
4. Digital Excise Administration (DEA).
5. Digital Municipal Taxes Administration (DMTA)^[1]

TRS products are designed to address a variety of digital tax administration challenges, as shown below.

Product		Description
TRS X2X: e-invoicing and digital tax administration for B2B, B2C, and C2C taxpayer segments, aiming at simplified tax compliance and ensuring the accuracy and completeness of tax revenue collection.
	TRS for B2B	TRS for B2B digitally administrates VAT, GST, and other indirect taxes to prevent tax evasion and fictitious tax deductions.
	TRS for B2C	TRS for B2C obtains sales information from taxpayers in real time and applies various tax administration techniques to prevent revenue concealment and tax evasion in the retail segment.
	TRS for C2C	TRS for C2C focuses on the legalization and taxation of C2C taxpayers on distinct tax regimes, e.g., for the self-employed. It supports digital registration, waiver of tax returns, convenient tax payment, and operations through online platforms, all without visiting tax authorities.
DDA (Digital Desk Audit)
	DDA	Digital Desk Audit (DDA) conducts remote audits of taxpayers based on the analysis of data from TRS systems and other sources. DDA automatically contacts taxpayers to settle tax claims and correct errors and violations identified during the audit without the involvement of tax officers.
DRF (Digital Return-Free)
	DRF	DRF increases tax revenues to the state from small and medium enterprises (SME) segments by eliminating tax returns, reducing the number of tax reporting errors, and shifting the focus of the tax authorities to control high-risk taxpayers in other segments.
DEA (Digital Excise Administration)
	DEA	DEA allows tax authorities to track the circulation of digitally marked excisable goods and ensure the completeness of excise tax collection.
DMTA (Digital Municipal Taxes Administration)
	DMTA	Supports data exchange between local tax authorities and local governments to improve the quality of tax administration. The DMTA is scheduled for release in 2024.

Table 1. TRS Products Overview.

In the following sections, we will look at the goals, objectives, and major features of the TRS products.

The Frequently Asked Questions section of this document includes information on how the TRS is implemented, how it integrates with existing systems, how it can be funded, and other frequent questions.

II. Modern Tax Administration Challenges

Modern tax administration faces numerous challenges in the current economic and technological environment.

Figure 2. Modern Tax Administration Challenges.

Tax Evasion, Fraud, and Growing Tax Gaps

The use of sophisticated techniques to evade taxes, such as transfer pricing, profit shifting, and shell companies, creates significant challenges for tax authorities, widening tax gaps and decreasing tax revenues.

Figure 3. Causes of the Tax Gap and Benefits of Implementing TRS.

Globalization has made cross-border tax issues increasingly complex, with challenges in determining the appropriate tax jurisdiction, double taxation, disputes over transfer pricing, and the tax base. The growing share of the cross-border online economy and informal employment increases the risks of reducing the tax base and revenues.

Growing Costs of Tax Administration

The complexity of tax laws and regulations means that tax authorities need to invest more resources in training and developing their staff, as well as in technology and infrastructure to manage and process tax data. The use of technology to collect and analyze data has increased the volume of information that tax authorities must process, leading to higher costs associated with data storage and analysis.

The need to combat tax evasion and avoidance has resulted in a more initiative-taking and sophisticated approach by tax authorities, requiring more resources and expertise. Increasing globalization and cross-border transactions have led to greater coordination and cooperation between tax authorities, which requires additional resources. The growth of the digital economy and informal employment have made it more challenging for tax authorities to track and collect taxes on a vast amount of business transactions.

Limited Resources, Budget Constraints, and Outdated Systems

Tax authorities often struggle with limited resources and outdated systems that are not equipped to deal with modern tax challenges, resulting in inefficiencies and difficulties in tax collection.

Examples of limited resources include inadequate staffing levels or lack of funding for training and development programs. Budget constraints can limit the ability of tax administrations to invest in innovative technology, leading to outdated systems that are slow and inefficient.

Outdated IT systems and security features, insufficient application functionality, and IT infrastructure performance cause delays in tax data processing, limit the scalability of control work, increase risks, and increase the potential for tax fraud and other violations.

Inefficient Tax Collection Processes

Inefficient tax collection processes can cause several pains, including:

1. Growing tax gap and decrease in the growth rate of tax revenues of the state. The growth of the tax gap and a decrease in potential tax revenues negatively affect the state budget and limit the ability of tax authorities to invest in the development of employees, processes, systems, and infrastructure.
2. Higher tax compliance and administration costs. Tax authorities and taxpayers may incur higher costs in trying to manage and comply with a complex and inefficient tax system, such as dedicating more time and resources to control work and tax compliance.
3. Limited visibility. Tax authorities may have limited visibility into taxpayer activities and transactions, making it difficult to identify potential non-compliance or tax evasion.
4. Delayed tax refunds. Inefficient tax collection processes can delay the processing of tax refunds, causing frustration for taxpayers and potentially impacting their financial stability.
5. Inconsistent enforcement. Inconsistent or inefficient enforcement of tax laws can erode taxpayer trust in the system, creating a perception that the tax system is unfair or arbitrary.

How Tax Administrations Can Response?

Tax administrations need to be innovative, agile, and responsive to changing economic and technological landscapes. By leveraging digital technologies, tax administrations can improve compliance, reduce costs, and increase transparency and fairness in the tax system. They can also better combat tax evasion and close the tax gap, ensuring that all taxpayers are treated equitably and that governments can collect the revenue necessary to fund essential public services.

To address modern challenges, tax administrations should embrace digital transformation to improve tax administration outcomes and taxpayer services through several strategies.

Investing in Technology

Modernization and investment in innovative technologies enhance the efficiency of the core tax administration information system (CTAIS). Modern digital tax administration solutions, such as e-invoicing, digital desk audit, return-free tax regimes, digital excise administration, big data collection and analysis, cloud technologies, artificial intelligence, and blockchain, help optimize key processes, improve the accuracy of information, enhance the quality of decision-making, increase tax revenues, and reduce costs.

These technologies enable tax authorities to work with taxpayers’ primary data in near-real-time, including access to supply chain operations, retail trade, and self-employed business activities. They also allow for scaling up control and service provision to taxpayers without increasing the number of employees.

Improving Risk Management and Resource Utilization

Tax administrations can improve risk management by collecting and collating more primary data, big data analysis, and predictive modeling to identify taxpayers with considerable risk, and simple and complex tax gaps.

It is then possible to automate control work on simple tax gaps, identify complex tax gaps, and optimize the use of resources by focusing on high-risk taxpayers or segments that generate significant new revenues.

Strengthening Partnerships

Tax administrations can collaborate with other government agencies, the private sector, and international organizations, including online platforms, to leverage their resources, share information, and develop innovative solutions to address shared challenges.

Promoting Voluntary Compliance

Encouraging voluntary compliance among taxpayers can help reduce the workload of tax administrations. Providing taxpayer education, simplifying the tax filing process, repealing tax returns, improving taxpayer services, and motivating consumers to demand fiscal receipts can help promote voluntary compliance.

III. TRS X2X: e-Invoicing and Digital Tax Administration for B2B, B2C, and C2C Taxpayer Segments

TRS for B2B

TRS for B2B focuses on tax administration of business transactions in the B2B segment and prevents fictitious tax deductions and evasion of VAT and other indirect taxes.

VAT is one of the most fraudulent taxes with evasion schemes, which are built to reduce payments to the state. Understatement of VAT also leads to automatic understatement of corporate income tax.

Figure 4. Participants in VAT Fraud Chains and Methods of VAT Fraud.^[2]

TRS for B2B Goals and Objectives

Implementation of the TRS for B2C helps to achieve the following goals.

Figure 5. TRS for B2B Goals.

TRS for B2B Key Capabilities

TRS for B2B system includes two major sets of functional components that could be deployed in stages or separately:

1. Base Components are focused on collecting electronic tax invoices (e-Invoicing).
2. Advanced Components are focused on detecting and closing simple and complex tax gaps.

The following figure shows the high-level architecture for both sets of components.

Figure 6. TRS for B2B High-Level Architecture.

TRS for B2B supports the following key capabilities.

Base Components (e-Invoicing)

Advanced Components (Tax Gap Management)

Tax officer and taxpayer registration and authentication in TRS Taxpayer and Tax Officer Workplaces. Integration with existing authorization, registration, and authentication systems for taxpayers in the state. Creation, exchange, and reconciliation of B2B tax invoices between sellers and buyers. Receiving standard tax invoices (B2B tax invoices) by tax authorities via TRS Taxpayer Workplace for B2B. Formatting and logical control of received primary and corrective tax invoices.

Receiving standard tax invoices (B2B tax invoices) by tax authorities through the application programming interfaces (APIs) and integrations with accounting and ERP systems. Calculation of tax liabilities based on tax invoices or registers of tax invoices. Identifying simple tax gaps between B2B tax invoices, tax returns, tax payments, and other data sources. VAT tree tool analyzes VAT flows between taxpayers to identify tax avoidance chains, proxy companies, complex tax gaps, and their beneficiaries. Violation case management to close complex tax gaps. Identification of criminal groups—organizers of VAT evasion.

Table 2. TRS for B2B Key Capabilities.

TRS for B2B uses Digital Desk Audit (DDA) to automate tax claim management and communication with taxpayers without the involvement of tax inspectors.

Implementing Electronic Online Cash Registers and TRS for B2C along with TRS for B2B improves overall tax administration efficiency.

The integration of both systems leads to more comprehensive data collection and analysis, enabling tax authorities to better monitor and enforce tax compliance across a wider range of transactions. This can result in improved tax revenue collection, reduced tax evasion, and better management of the entire tax system.

Figure 7. TRS for B2B Implementation Scope.

TRS for B2B Base and Advanced components should be integrated with the existing taxpayer portal and core tax administration information system.

For more details about TRS for B2B implementation, please refer to the following document: “Implementing TRS for B2B.”

TRS for B2C

TRS for B2C obtains real-time information on taxpayers’ sales and applies various tax administration techniques to prevent revenue concealment in the retail segment to ensure completeness of revenue accounting and taxation of B2C taxpayers.

TRS for B2C uses data from fiscal receipts issued by online electronic cash registers (OECRs).

The main way to underreport VAT and turnover taxes in retail is to hide revenue from the tax authorities, including by accepting cash payments.

TRS for B2C Implementation Goals and Objectives

Implementation of TRS for B2C pursues the following major goals.

Figure 8. TRS for B2C Goals.

The traditional approach to B2C tax administration is based on the manual, lengthy, prone to errors, and expensive process of collecting and verification of fiscal data.

TRS for B2C automates and improves the process of collecting fiscal data, calculating tax liabilities, and determining tax gaps, as shown in the following diagram:

1. The electronic online cash register (OECR) issues a fiscal receipt to the consumer (paper or digital) and sends the data to the tax authority directly or through authorized Fiscal Data Operators (FDOs) in near real-time.
2. Consumers are incentivized to request a fiscal receipt from the seller and send the receipt to the tax authority for verification.
3. The tax authority receives transaction data from both the seller and the consumer and can verify that they match.

Figure 9. Implementation of TRS for B2C and Online Electronic Cash Registers (OECRs) can Increase Tax Collection from Retailers by up to 150%.

The main objective of TRS for B2C is to get real-time information about taxpayers’ revenue and apply various tax administration methods to prevent non-payment of taxes.

The following figure shows the general scope of the TRS for B2C implementation.

Figure 10. TRS for B2C Implementation Scope.

TRS for B2C Key Capabilities

TRS for B2C supports the following key capabilities.^[3]

TRS for B2C

Key Capabilities

Authorization, registration, and authentication of taxpayers and systems / devices that create fiscal receipts. Ready-made software OECRs (web, desktop, mobile) to create fiscal receipts supporting offline operations. Issuance of simplified tax invoices (fiscal receipts) to consumers in the absence of the Internet or access to the central system of tax authorities. Protection of fiscal receipts from changes by taxpayers by using software (including cloud based) and hardware fiscal modules and data encryption. Transmission of receipts from TRS and third party OECRs directly to tax authorities or through fiscal data operators (FDOs). Tax and tax rates constructor to support a variety of tax regimes. Taxpayer and Tax Officer Workplaces to work with registers of fiscal receipts, revenue aggregation, and tax calculation. Motivation for consumers to demand receipts from sellers with the lottery drawings, tax deductions, and cashback. Work with customer requests and complaints about non-issuing of receipts by sellers. A mobile and web app for tax officers supporting the field audits of points of sales and the compliance with OECR usage requirements. Integration with geographic information systems to identify taxpayers who do not issue receipts. Involvement of shopping malls and market operators in the tax administration of their retail tenants. Integration with the Digital Excise Administration (DEA) system to drive illegal products out of circulation and register the retirement of marking codes at the point of sale, which additionally increases excise tax collection.

Table 3. TRS for B2C Key Capabilities.

TRS for B2C should be integrated with the existing IT systems including the taxpayer’s portal and core tax administration information systems.

Implementing Electronic Online Cash Registers and TRS for B2Calong with TRS for B2B improves overall tax administration efficiency.

For more details about TRS for B2C implementation, please refer to the following document: “Implementing TRS for B2C.”

TRS for C2C

TRS for C2C (Consumer-to-Consumer taxpayer segment) focuses on the legalization of business activities conducted by self-employed individuals, a segment often challenging to monitor. This solution enables tax authorities to track income from informal sectors, reducing tax evasion.

Income from informal employment and trade may exceed the volume of formal trade in the country and not be taxed. The number of residents is huge and the ability of tax authorities to control millions of self-employed is limited.

TRS for C2C supports sales accounting and taxation of direct sales made by private individuals to other individuals (C2C operations), to businesses (C2B), and via online platforms (C2B2C). TRS for C2C mobile app supports calculation and online payment of taxes, without visiting tax authorities and filing tax returns.

TRS for С2С Goals and Objectives

The major goals and objectives of a TRS for C2C implementation project aimed at reducing informal employment across a nation include:

1. Legalizing informally employed workers. The primary goal is to legalize informally employed workers by enabling a simple and convenient pathway for them to enter the formal economy. This could involve the involvement of electronic platforms and banks to help individuals become registered and documented.
2. Simplifying the tax regime. To encourage informally employed workers to become part of the formal economy, the project could aim to simplify the tax regime so that it is easier and more convenient for them to comply with tax regulations.
3. Providing social protection for officially self-employed workers. Once workers have been legalized, the project could aim to provide social protection for them, such as confirmation of official income to apply for financial and social aid.
4. Increasing tax revenues. The project could aim to increase tax revenues by bringing more workers into the formal economy and improving tax compliance.
5. Promoting economic growth. By reducing informal employment and increasing the number of workers in the formal economy, the project could aim to promote economic growth and development.

Implementing TRS for B2C accomplishes the following goals.

Figure 11. TRS for C2C Goals.

The main objective of TRS for C2C is to create an infrastructure for the legalization of informal businesses of the country’s residents, easy calculation, and payment of taxes by them, and motivate citizens to legalize.

Implementation of the TRS for C2C would seek to reduce the prevalence of informal employment in the country and create a more formalized and regulated labor market that benefits workers, employers, and the country’s economy.

TRS for C2C Key Capabilities

TRS for C2C supports the following key capabilities.

TRS for C2C

Key Capabilities

A simplified process of taxpayer registration without visiting tax authorities through the tax mobile app and through digital platforms that give residents orders and income from customers. An effortless registration of taxpayer income through TRS for C2C mobile app or through the integration with digital platforms and banks and transmitting income information to tax authorities.Issuance of an electronic tax receipt by the C2C seller to the buyer via SMS or email. Automatic tax calculation by the tax administration without the need for taxpayers to file a tax return. Tax payment via mobile application or integrated banks.Issuance of official tax registration and income certificates for applying for loans, visas, and social assistance from the state. Integration API to capture data from digital platforms that help C2C sellers get orders and revenue from buyers, and from partner banks on C2C taxpayers’ income and tax payments.

Table 4. TRS for C2C Key Capabilities.

Figure 12. TRS for C2C Mobile Application for Taxpayers.

For more details about TRS for C2C features and implementation, please refer to the following document: “Implementing the TRS for C2C.”

Digital Desk Audit (DDA)

Digital Desk Audit (DDA) conducts remote audits of taxpayers by collecting and analyzing data from TRS systems and other digital sources such as tax invoices, tax returns, bank statements, and government registers.

Digital desk audit automatically finds violations in tax reporting data, informs taxpayers about violations, and controls their remediation by taxpayers without the involvement of tax officers.

With these capabilities, DDA streamlines the audit process and improves tax compliance, ultimately leading to increased tax revenues for the government.

DDA Goals and Objectives

Digital Desk Audit pursues the following major goals.

Figure 13. DDA Goals.

The desk audit is time and resource-consuming for taxpayers and tax authorities.

Figure 14. Traditional Tax Reporting Process.

Digital Desk Audit saves time, and headcount and improves tax compliance and revenue collection. Implementation of the DDA system helps to achieve the following objectives.

• Save time and money. Digital Desk Audit automates many tasks that are currently done manually, such as reviewing tax returns and identifying potential errors. This frees auditors to focus on more complex tasks, and it can help businesses save money on tax compliance.
• Improve accuracy and compliance. Digital Desk Audit uses a variety of data sources and algorithms to identify potential errors and inconsistencies in tax returns, which helps taxpayers avoid penalties and interest. The system can also guide how to improve compliance with tax laws.
• Reduce risk and improve collection. Digital Desk Audit helps tax authorities identify inconsistencies and violations in tax returns. This helps to decrease the tax gap and increase revenue without adding or even decreasing audit staff.

With the introduction of the DDA, the tax authorities will be able to reduce corruption by excluding tax officials from the processes of identifying violations and interacting with taxpayers.

DDA Key Capabilities

DDA

Key Capabilities

Integration with tax information systems and TRS components.100 percent automatic detection of violations based on taxpayer data. No involvement of tax authorities’ employees in control processes, which increases scalability and inevitability of control and reduces corruption factors. Detects multiple types of violations for different tax regimes and information flows. Selects violations by amount and significance for communicating with taxpayers. Notifies taxpayers about detected violations by information letters and controls readings and responses. Integration with information resources of tax administration for interaction with the taxpayer (personal cabinet of the taxpayer). Automatically controls violation closure by submission of corrected declaration by the taxpayer. Controls the deadlines of closing of violations. Integration with information resources of tax administration for processing of administrative offenses.

Table 5. DDA Key Capabilities.

DDA works in conjunction with TRS systems for B2B, B2C, and C2C and manages the remediation of tax claims to eliminate the identified violations and monitors compliance as shown in the following figure.

Figure 15. General Digital Desk Audit Process.

IV. Digital Return-Free (DRF)

The implementation of the Digital Return-Free (DRF) system increases tax revenue collection by simplifying the tax regime, repealing tax returns, reducing errors, and enabling tax authorities to focus on high-risk taxpayers.

By easing the burden of tax compliance on taxpayers, the DRF system can encourage voluntary compliance with tax laws, leading to more efficient tax collection and ultimately decreasing the tax gap and increasing revenue collection.

DRF Goals and Objectives

Implementation of the DRF system helps to achieve the following goals and objectives.

Figure 16. DRF Goals.

• Reducing the costs, time, and efforts required to manage taxes. The DRF system repeals and automates as much of the manual tax preparation process as possible. Tax authorities can calculate tax obligations from primary data such as tax invoices and get rid of tax returns. This helps to reduce the cost of tax administration for both taxpayers and authorities. This is achieved by using the combination of e-invoicing, digital tax administration, and digital desk audit.
• Improving revenue collection. The implementation of the DRF system increases the state’s revenue collection by simplifying the tax administration for taxpayers, reducing the likelihood of errors and omissions, allowing tax authorities to bring millions of self-employed people out of the shadow economy, and focus on high-risk taxpayers who may be evading taxes, ultimately resulting in growing tax collection.
• Improving compliance with tax laws and increasing taxpayer satisfaction. The DRF system helps taxpayers comply with tax laws by providing them with clear and concise information about their tax obligations. DRF identifies potential errors and inconsistencies in the primary taxpayer data, calculates tax obligations,  and issues tax bills to taxpayers so they can accept and pay them without filing returns. Taxpayers get access to their primary tax data and tax obligations in a user-friendly format. It helps to improve tax compliance, make informed decisions about tax planning, and increases taxpayer satisfaction with the tax system.

DRF Key Capabilities

DRF supports the following key capabilities.^[4]

DRF

Key Capabilities

Maintaining the register of taxpayers using a return-free tax regime and their accounts. DRF uses data from TRS and other systems to identify potential errors and inconsistencies in primary tax documents, e.g., tax invoices. Fiscal data interchange with banks, government registers, and other third parties. Calculation of tax base and tax liabilities based on the information from TRS systems and third parties.Issuing tax bills and acceptance of taxpayers’ payments.

Table 6. DRF Key Capabilities.

V. Digital Excise Administration (DEA)

The Digital Excise Administration (DEA) system enables tax administrations to track and trace the circulation of digitally marked excisable goods to ensure the completeness of excise collection.

Implementation of the DEA together with the national Track & Trace system can increase excise tax revenue by up to 700% for individual product categories.

DEA Goals and Objectives

DTT implements DEA systems along with the national Track & Trace system to achieve the following goals.

Figure 17. DEA Goals.

Implementation of the DEA system aims to achieve the following objectives:

• Reduce the circulation of counterfeit or smuggled excisable goods.
• Track the movement and origin of excisable goods in the country from producers or importers to consumers.
• Digitize data entry and processing throughout the supply chain from production lines to points of sale.
• Enable consumers to verify the authenticity of goods and report counterfeits.

DEA Key Capabilities

DEA prevents illegal trade in excisable goods and increases state revenue from excise taxes through:

• Marking. Issuing and affixing secure and non-removable identification markings to the products.
• Tracking. Determining and tracking the location of the product or product packages.
• Tracing. Determining the origins and destinations of products and goods.

Figure 18. The Digital Excise Administration Concept.

A country may have a dedicated National Track & Trace Operator who is responsible for monitoring the movement of excisable goods from the production environment or importation to the points of sale or exportation. In this case, the tax authority needs integration between the DEA and the Operator to ensure effective excise tax administration.

The DEA system should receive real-time information from the national track and trace system regarding the movement of excisable goods, including their quantity, origin, destination, and tax liability. This will support seamless data sharing, enable the tax authorities to track the flow of excisable goods and ensure that the correct amount of excise tax is paid at each stage of the supply chain.

Figure 19. Track & Trace and DEA Systems Operating on the National Level.

The DEA system supports the following key capabilities.^[5]

DEA

Key Capabilities

Registration of manufacturers/importers and manufacturing lines. Integration with manufacturing lines and customs declarations. Ordering new marking codes by manufacturers/importers and maintaining the register of orders. Issuance of digital marking codes for affixing to product packaging in the form of a digital two-dimensional barcode for excisable goods that are manufactured in the country or imported from abroad, so they can be tracked throughout the supply chain. Entry of marking codes into circulation. Control of marking code movement between participants of goods circulation. Withdrawal of codes from circulation via integration with POS systems and TRS for B2C, including use of online electronic cash registers and fiscal receipts. Registers of marked goods, marking documents, and issued marking codes. Virtual warehouse of product instances for each participant in the circulation of marked goods. Generation of marking codes movement path for full traceability. Calculation of excise taxes and control of excise returns. Integration with Track & Trace Operator. DEA provides integration with the TTO information system to issue and withdraw marking codes in and from the circulation and collect data for analytics dashboards and reports. Primary and reference data management. The system supports GS1-compatible and other reference data sets on excisable goods. Reporting. The system generates reports on excisable goods to inform decision-makers and to track the performance of the DEA system. User workplace. The DEA system provides a user-friendly interface that is accessible to tax administration, goods manufacturers, marking codes circulation participants, and other stakeholders. Consumer mobile app. DEA provides a mobile application for consumers to check the authenticity of marked goods and report violations to tax authorities.

Table 7. DEA Key Capabilities.

VI. Digital Municipal Taxes Administration (DMTA)

DMTA supports data interchange between local tax officials and local governments to improve the quality of tax administration. DMTA is scheduled for the announcement later in 2024.^[6]

VII. Frequently Asked Questions

How is TRS Implemented?

Implementing TRS products requires a staged approach that involves several key steps. They can vary depending on a range of factors, such as the size, complexity, and level of maturity of the tax system, the anticipated scope, and goals of the TRS project, and the level of existing IT infrastructure and technical expertise.

General TRS implementation guidance is available in the “Tax Revenue Suite (TRS) Implementation Framework.” Here are some general steps required for TRS implementation:

1. Analysis of the existing tax regulation and proposing changes to the regulatory framework. This includes understanding the tax laws, procedures, and regulations that currently apply to distinctive groups of taxpayers, identifying the specific challenges they face in complying with these requirements, and proposing a regulatory reform if required.
2. “As Is” and “To Be” Assessment. Before implementing a TRS, it is important to assess the current tax administration system (the “as is” state) and identify the desired future state (the “to be” state). This assessment should involve a thorough analysis of the existing core tax administration information system (CTAIS) and IT infrastructure, business processes, policies, and procedures.
3. Requirements Development. Once the “as is” and “to be” states have been identified, the next step is to develop a set of requirements for the TRS. These requirements should be based on the needs and goals of the tax administration system, they may require initial development of the digital tax administration concept^[7] and should be created in collaboration with key stakeholders.
4. Implementation Plan Development. With the requirements in hand, the next step is to develop an implementation plan for the TRS. This plan should include a timeline for implementation, a budget, a list of required resources, and a list of potential risks and mitigation strategies. The plan should also include pilot stages for testing and refining the TRS.
5. Piloting. Once the implementation requirements and plan have been approved, TRS should be piloted in a limited setting to evaluate its functionality and ensure that it is meeting the requirements of the tax administration system. This may involve evaluating the system in a limited number of country regions, or with a limited group of taxpayers.
6. Product Refining. During the pilot stages, the TRS should be evaluated and refined to ensure that it meets the requirements of the tax administration system. This may involve iterative testing and development, as well as ongoing consultation with key stakeholders.
7. Staged Implementation. After successful piloting, TRS can continue to be rolled out in phases to new categories of taxpayers and territories, with gradual expansion over time.
8. Other Necessary Steps. In addition to the above steps, there may be other necessary steps that need to be taken to implement the TRS. These may include data migration, system integration, user training and support, and ongoing maintenance and support.

Implementing TRS is a complex process that requires careful planning, stakeholder involvement, and phased implementation, testing, and possibly refinement. By taking a staged approach and following best practices for implementation, tax administrations can increase their chances of success and achieve their goals for digital transformation.

We provide estimated implementation roadmaps with timelines for each TRS product in the respective implementation guides.

How Does TRS Integrate and Work with the Core Tax Administration Information System (CTAIS)?

TRS provides new functionality in addition to the existing CTAIS and does not replace it. This means that TRS products are implemented independently of the CTAIS, but integration, careful planning, design, and implementation are required.

Figure 20. DTT Tax Revenue Suite (TRS) in the Tax Administration IT Landscape.

To integrate the new TRS modules with the core tax administration information system, the following steps can be taken:

1. Identify Integration Points. The first step is to identify the integration points between the new digital tax administration modules and the core tax administration information system. This can be done by analyzing the existing IT infrastructure and identifying the areas where the new modules will interact with the core system.
2. Design Integration Architecture. Once the integration points have been identified, the next step is to design the integration architecture. This involves determining the technical specifications, protocols, and formats for exchanging data between the new modules and the core system.
3. Develop Integration Interfaces. After designing the integration architecture, the next step is to develop the integration interfaces. This involves developing the software components that will facilitate the exchange of data between the new modules and the core system. TRS products are implemented in a microservice architecture and offer advanced integration capabilities based on application program interfaces (APIs). For a detailed description of the interfaces, refer to the TRS architecture description.
4. Test Integration. Once the integration interfaces have been developed, they should be evaluated to ensure that they are functioning as intended. This may involve assessing the interfaces in a staging environment before deploying them in a production environment.
5. Deploy Integration. After successful testing, the integration interfaces can be deployed in the production environment. This should be done in a carefully planned and controlled manner to minimize the risk of disruption to the tax administration system.
6. Monitor Integration. After deployment, the integration interfaces should be monitored to ensure that they are functioning correctly, and that data is being exchanged as expected. This may involve setting up special monitoring tools and processes to detect and resolve any issues that arise.

Integrating TRS modules with the core tax administration information system requires a careful and systematic approach. By following best practices for integration and testing, tax administrations can ensure that their digital tax administration system is working effectively and efficiently.

How Does TRS Integrate with Internal Systems and External Parties, and Support Users’ Onboarding and Offboarding?

The methods for connecting with internal and external parties, user onboarding, and offboarding in a Tax Revenue Suit (TRS) involve a structured and secure approach to facilitate interactions with IT systems and manage user access. We use microservice-based architecture and APIs for the integration of internal and 3rd parties’ components. Here is an overview of key aspects.

Connecting with Third Parties and Internal Systems

1. API Integration. TRS products provide Application Programming Interfaces (APIs) to enable seamless integration with third-party systems, such as banks, financial institutions, digital platforms, and government agencies. These APIs allow for the exchange of tax-related data securely.

API implementation varies depending on the product’s functions. For example, the REST API in TRS for B2B includes methods and data types that provide the following functions:

• User authorization and authentication.
• Authorization token refresh.
• Creation of invoices.
• Creation of corrective and canceling invoices.
• Accepting an invoice as a counterparty.
• Rejecting an invoice as a counterparty.

2. Secure Data Transmission. When connecting with external entities, TRS systems prioritize secure data transmission using encryption protocols like SSL/TLS. This ensures that sensitive data remains confidential during transfer.
3. Authorization and Authentication. User and third-party access to TRS is carefully controlled by various authorization and authentication methods for tax authority employees, taxpayers, and tax administration partners:
   1. Tax authority employees use authentication based on the Keycloak open-source Identity and Access Management system. TRS also supports integration with LDAP and Active Directory.
   2. For taxpayer authentication, both for API access and direct access, it is recommended to use the methods already in use in the country. This can be the login and password of the main personal account or an electronic signature with PKI (Public Key Infrastructure) authentication. This avoids the need for taxpayers to undergo repetitive personal identification (Know Your Customer, KYC) procedures. TRS integrates with existing methods and supports the authorization of tax authorities and e-government using the OAuth 2.0 protocol.
   3. For tax authority’s partner authorization for tax authority API access, TRS uses token-based technology. These tokens are issued in the personal workplace after primary authentication.
   4. Data Validation. To maintain data accuracy and integrity, TRS systems validate data received from third parties. Format and logic control (FLC)  ensures that the information is consistent and accurate.

User Onboarding

1. Registration Process. New users, such as taxpayers or tax officers, go through a registration process. This typically involves providing identification details, creating login credentials, and agreeing to terms and conditions, if applicable.
2. Identity Verification. Identity verification measures, such as Know Your Customer (KYC) procedures, may be implemented during onboarding to confirm the identity of users. For example, TRS can scan a user’s government-issued ID, recognize it using artificial intelligence (AI), and verify the user’s data against government registers to confirm the user’s identity.
3. Strong authentication. Stronger authentication methods, like two-factor authentication (2FA) along with login and password, may be required to enhance the security of user accounts.
4. Training. Users are often provided with training or guidance on how to use the TRS system effectively and securely. This includes instructions on data entry, processing, and basic security best practices.
5. Access Control. Access to TRS systems is tightly controlled. TRS assigns users specific roles and permissions based on their needs. Role-based access control ensures that users can only access the features and data relevant to their roles.

User Offboarding

1. Account Deactivation. When a user’s relationship with the TRS system ends, their account is deactivated or suspended to prevent further access.
2. Data Retention Policies. TRS systems adhere to data retention policies that specify how long user data is retained after offboarding. This is often influenced by specific legal requirements.
3. Data Purge. After the retention period expires, user data is securely purged from the system to maintain compliance with data privacy regulations.
4. Notification. Users are typically notified of the offboarding process and any steps they need to take, such as downloading records or settling outstanding tax liabilities.
5. Access Revocation. Any access or permissions granted to the user are revoked to ensure they cannot access the TRS system after offboarding.
6. Audit Trail. Offboarding events are logged into the system’s audit trail to maintain a record of actions taken during the process.
7. Data Transfer (if applicable). In some cases, data related to offboarded users may need to be transferred securely to other government agencies or entities as required by law.

The strategy for connecting with third parties, user onboarding, and offboarding in TRS is designed to balance convenience for users with the need for robust security and compliance with legal and regulatory requirements. It aims to provide a seamless user experience while safeguarding taxpayer data and maintaining the integrity of the tax system.

What is TRS Security Strategy Related to Data?

TRS implements a robust security strategy to protect confidential taxpayer information and ensure compliance with tax secrecy rules:

1. Storing of Tax Data. TRS stores all tax data within the tax authority. Integration with the main tax administration system also takes place within the tax authority. TRS products can be hosted in the cloud of the tax authority or leased data centers within the country. TRS supports hosting on AWS and Azure if used by tax authorities.
2. Data Encryption in Transit. TRS products employ encryption protocols (such as SSL/TLS) to secure data transmitted between taxpayers, tax authorities, and the system. This ensures that data remains confidential during transmission.
3. Data at Rest Encryption. Data stored within TRS databases is encrypted to protect it from unauthorized access. This includes taxpayer records, financial data, and historical tax information.
4. Access Controls. Access to TRS systems is tightly controlled. TRS assigns users specific roles and permissions based on their needs. Role-based access control ensures that users can only access the features and data relevant to their roles.
5. Authorization and Authentication. Strong authentication methods, like two-factor authentication (2FA), can be implemented to ensure that users are who they claim to be. Authorization mechanisms restrict users to specific functions and data based on their roles.
6. Audit Trails. TRS products maintain detailed audit logs of all system activities, including user logins, data accesses, and modifications. These logs are regularly reviewed to detect and respond to suspicious activities.
7. Data Masking. To protect sensitive information, TRS systems may employ data masking techniques. This means that even authorized users may only see part of the data, such as the last four digits of a taxpayer’s identification number (TIN).
8. Third Party Firewalls and Intrusion Detection Systems (IDS). Network security is crucial. Firewalls are set up to filter incoming and outgoing traffic, while IDS monitors the network for unusual patterns that may indicate a security breach.
9. Vulnerability Assessment and Penetration Testing. Regular security assessments should be conducted to identify vulnerabilities in the system. Penetration testing should be performed to simulate attacks and discover weaknesses before malicious actors can exploit them.
10. Data Backup and Disaster Recovery. Third-party backups should be performed regularly to prevent data loss due to system failures or cyberattacks. Disaster recovery plans should also be developed and evaluated to ensure data availability in case of emergencies.
11. User Training and Awareness. Training programs should be developed to educate system users about security practices and the importance of data protection, including tips on creating strong passwords and recognizing hacking attempts.
12. Compliance with Data Privacy Laws. TRS products are designed to comply with general tax data protection regulations. The capabilities of the system should be clarified before implementation in a particular country.
13. Regular Security Updates. Software and systems are kept up to date with the latest security patches and updates to mitigate vulnerabilities as part of the annual TRS maintenance and support subscription.

It is important to note that the specific security measures and strategies can vary based on the jurisdiction, the tax agency’s policies, and the technologies used in the TRS products. However, the overarching goal is to ensure the confidentiality, integrity, and availability of taxpayer data while complying with legal and regulatory requirements.

Does TRS Support Microservice Architecture?

Yes, TRS products are built on a microservice architecture. More details about the TRS microservice architecture can be found in the following documents:

• TRS X2X DDA Functional Architecture.
• TRS X2X DDA System Architecture.
• TRS B2B B2C Data Architecture.
• TRS DEA Functional Architecture and Capabilities.

Microservices architecture is an approach to application development that involves moving away from a single, monolithic structure. Instead of executing all bounded contexts of the application on a single server through in-process interactions, we utilize multiple small applications, each corresponding to a specific bounded context.

This approach facilitates easy system deployment and simplifies the process of scaling individual components. Moreover, this approach offers reliability; even in the event of one microservice failing, the system maintains partial functionality.

For deploying and operating the TRS system, we employ Kubernetes. Kubernetes is a convenient and dependable container orchestration system, which streamlines deployment, maintenance, and scalability procedures for microservices.

To ensure guaranteed message delivery between microservices, we employ the Apache Kafka message broker. Designed as a distributed, horizontally scalable system, Kafka manages increasing throughput both in terms of the number of sources and subscribers. Kafka retains data for extended periods and supports distributed data storage with record duplication (replication factor), ensuring system reliability and guaranteed event processing in the event of the failure of an internal or external service.

How Does TRS Collect and Store Data?

Details about how TRS collects and stores data can be found in the following documents:

• TRS X2X DDA Functional Architecture.
• TRS X2X DDA System Architecture.
• TRS B2B B2C Data Architecture.
• TRS DEA Functional Architecture and Capabilities.

The primary data is stored in a distributed database based on PostgreSQL/Greenplum, with table partitioning based on the dates of the expiration of current codes and documents. This approach allows for the storage of only the current data in operational management. Historical data is organized into partitions with subsequent archiving, conserving space in the operational data store and providing convenient management of non-current data sets.

To enhance system performance, a clustered in-memory cache Redis is employed (a data caching system in RAM), ensuring extremely fast access to the system’s current data.

The archive of incoming data, as well as outdated data from the system, can also be stored in Cassandra or ScyllaDB NoSQL databases.

Cassandra and ScyllaDB are distributed NoSQL database management systems. They are designed to create highly scalable and reliable storage for massive datasets, represented in a hash-like format.

The analytical system (a system for generating reports from the entire dataset of the system) is built on ClickHouse. ClickHouse is a columnar database management system (DBMS) designed for online analytical processing (OLAP) queries.

In summary, TRS products utilize the following database management systems:

1. PostgreSQL—the primary database.

2. Redis cluster—a caching system for real-time data.

3. ScyllaDB—a distributed database for archival purposes.

4. HBase—for storing data in binary (source) form in some products.

5. ClickHouse—a database for report generation.

How Does TRS Support Scalability, High Availability, and Reliability?

TRS places significant emphasis on ensuring the reliability, scalability, and availability of the system. Here are the key points regarding reliability and availability:

• Reliability Requirements at All Levels. TRS incorporates reliability requirements at every architectural level. This approach ensures that the system is robust and dependable, not just at the application layer but across the entire infrastructure.
• Horizontal Scalability at Every Architectural Level. Scalability is an integral part of TRS’s design philosophy. At every architectural level, including microservices, message brokers, and databases, horizontal scalability is a fundamental consideration. This design choice guarantees that the system can efficiently manage increased loads while maintaining reliability.
• 24/7 Availability. TRS is designed to operate continuously, 24 hours a day, 7 days a week. This high availability is vital for tax authorities to ensure uninterrupted tax administration processes and taxpayer services.

Ensuring Availability

TRS leverages Kubernetes’ built-in high availability features to enhance the system’s reliability and ensure continuous operation. Kubernetes provides several mechanisms to achieve high availability:

• Replica Sets. Kubernetes allows TRS to define replica sets for its microservices. This means that multiple instances of each microservice can run simultaneously. If one instance fails, Kubernetes automatically replaces it with a new one, ensuring uninterrupted service.
• Load Balancing. Kubernetes employs load balancing to evenly distribute incoming traffic across multiple instances of microservices. This load-balancing mechanism enhances system reliability by preventing any single microservice from becoming a bottleneck.
• Self-healing. Kubernetes actively monitors the health of TRS microservices. If any service becomes unhealthy or unresponsive, Kubernetes can automatically restart it or reschedule it to a healthy node, contributing to system reliability.
• Scaling. Kubernetes allows TRS to scale microservices horizontally, adding or removing instances based on workload. This flexibility enables TRS to manage increased demand while maintaining high availability.

By utilizing these features inherent to Kubernetes, TRS can achieve an elevated level of availability, making it a robust and dependable platform for tax administration processes and taxpayer interactions.

Ensuring Scalability

Scalability is a core principle of the TRS system and is organized at various levels:

I. Microservices Level. Scalability at this level is facilitated by the Kubernetes orchestration system. Each microservice is designed to support horizontal scaling. The number of instances of a specific service is controlled by the orchestrator based on load metrics during load testing. It can be adjusted during system operation.

II. Message Broker Level. Scalability at this level is inherent in architecture, thanks to Apache Kafka.

III. Database Level:

• PostgreSQL. As partitioning is utilized, the operational storage volume will not include the entire data set. Hence, it is more reasonable to move scalability to the level of the hot cache, Redis cluster, which is designed for scalability by the manufacturer.
• Redis. To ensure the scalability of Redis, it is important to use Redis Cluster, auto-sharding, Redis Sentinel, and, in some cases, Redis Enterprise.
• HBase. To ensure the scalability of HBase, it is important to use auto-sharding, regions, and HBase parameters’ tuning.
• Cassandra / ScyllaDB. Scalability is inherent in the system as provided by the manufacturer.
• ClickHouse. Specifically designed to work in clusters across different data centers, it scales linearly to hundreds of nodes.

Ensuring Fault Tolerance

Like scalability, fault tolerance in the TRS system is ensured at multiple levels:

1. Microservices Level. Since all microservices run in the Kubernetes orchestration system, fault tolerance needs to be provided at this level. This means the minimum required number of Kubernetes Master Nodes should be three.
2. Message Broker Level. Just like Kubernetes, the number of Kafka brokers should be no less than three. The replication factor for all topics should also be no less than three. It is worth noting that when sending messages to the Kafka topic, all producers should have the acks parameter set to “all.” This means that a producer will receive a positive acknowledgment from Kafka only when the message is successfully written to all brokers in the Kafka cluster.
3. Database Level:

• PostgreSQL. Active-Passive data replication is in place. In the event of an Active database failure, the Passive takes over as the Active either manually or automatically, depending on the system’s availability requirements.
• Redis. To ensure fault tolerance of Redis, it is important to use Redis Cluster, Redis Sentinel, and, in some cases, Redis Enterprise.
• HBase. To ensure fault tolerance for HBase, it is important to use replication, recover crashed region servers, configure high availability, and use load balancing.
• Cassandra / ScyllaDB. Fault tolerance, like scalability, is provided by ScyllaDB “out of the box.” However, it is essential to note that the replication factor for tables should be no less than 3, and the consistency level should be at least 2.
• ClickHouse. A minimum of 2 replicas is required to ensure fault tolerance.

These measures are essential to guarantee both scalability and fault tolerance in the TRS system across its various components.

What are the TRS Requirements for IT infrastructure?

TRS places a key emphasis on having minimal specific infrastructure requirements, making it highly adaptable to standard server hardware. This flexibility is due to its ability to easily scale horizontally across microservices and system components.

For example, here are the recommended minimum configurations of TRS Digital Excise Administration (DEA) to process approximately 1 billion marking codes per year (please note that precise sizing details should be determined through requirements engineering and load testing before the system’s industrial deployment):

Recommended Minimum Configuration for One Host:

• CPU: 2 x Intel Xeon E5-2620 v4
• RAM: 128 GB
• HDD: 2 x 2 TB SSD

Distribution Across Various Components:

• Kubernetes: 6 hosts
• Kafka: 4 hosts
• Greenplum (PostgreSQL): 6 hosts
• Redis cluster: 4 hosts
• ScyllaDB: 8 hosts
• ELK Stack: 2 hosts
• Prometheus + Grafana: 2 hosts
• ClickHouse: 4 hosts

Total Hosts Required: 36

NOTE: These are approximate configurations for the individual TRS product. The actual infrastructure requirements should be determined based on the specific needs and performance testing of the system before its deployment in a production environment.

Do Tax Authorities Need to Change Anything When Implementing TRS?

Yes, tax authorities may need to update their processes, policies, and procedures when implementing the TRS. This is because the TRS is a new system that may operate differently or add new value to the existing tax administration system.

Some of the changes that may be required when implementing a TRS include:

1. New Business Processes. The TRS may require new business processes to be developed to support the system. This may involve changes to the way that tax authorities collect, process, and manage tax-related data.
2. New Policies and Procedures. Tax authorities may need to develop new policies and procedures to govern the use of the TRS. This may include guidelines for user access and security, data privacy, and system usage.
3. IT Infrastructure. The TRS may require changes to the IT infrastructure, such as upgrades to hardware and software, to ensure that the system operates effectively.
4. User Training. Tax authorities may need to provide training to users to ensure that they understand how to use the TRS. This may involve training in new business processes, policies, and procedures, as well as training on the system itself.
5. Change Management. Tax authorities may need to implement a change management program to help manage the transition to the new system. This may involve communicating the benefits of the TRS to stakeholders, addressing any concerns or resistance to change, and providing ongoing support to users.

Overall, implementing a TRS requires careful planning and coordination to ensure that the system operates effectively and efficiently. Tax authorities should consider the changes that may be required when implementing a TRS and take steps to address them to ensure a successful implementation.

What is the DTT Licensing Model and What Budget is Needed to Implement the TRS?

DTT’s Licensing Model includes the following components:

• License pricing is based on the TRS application modules.
• 20% of annual support for each TRS module license includes all bug fixes.

The budget needed to implement a TRS can vary widely depending on a range of factors, such as the size and complexity of the tax system, the scope, and goals of the TRS project, and the level of existing IT infrastructure and technical expertise. Here are some general factors that may affect the budget required for TRS implementation:

1. Consultancy fees. The scope of consultancy can vary depending on the specific requirements and goals of the project. in general, the consultancy may involve the following tasks: assessment of the current tax administration system, identification of key stakeholders, development of a digital tax administration concept, cost-benefit analysis, development of the implementation plan, functional, and system and operational requirements for TRS products and modules.
2. Software and hardware costs. The cost of purchasing or refining the TRS software and hardware components can be a major component of the budget. This may include the cost of licensing, customization, and maintenance of the software and hardware.
3. Technical support and training. The cost of technical support and training for tax officials and other stakeholders can also be significant, particularly if the TRS implementation requires a significant shift in technical expertise or workflow.
4. System integration and data migration. If the TRS implementation requires the migration of data from existing systems and system integration, the cost of data migration and integration can also be significant.
5. Project management and governance. The cost of project management and governance can also be significant, particularly for larger and more complex TRS implementations. This may include the cost of hiring project managers, technical experts, and other personnel to oversee and manage the implementation.
6. Infrastructure and security. The cost of infrastructure and security measures, such as data center and network upgrades, server upgrades, and cybersecurity measures, can also be a significant component of the budget.
7. Contingencies. It is also important to budget for contingencies, such as unexpected technical issues or delays in implementation, which may arise during the implementation process.

The budget needed to implement a TRS can vary widely depending on the specific project and context. It is important to conduct a thorough analysis of the project requirements and costs to develop an accurate budget estimate.

What is the DTT Support Model?

DTT’s Support Model includes the following components:

• DTT passes to the customer the source code of TRS applications along with rights to modifications.
• DTT trains the partner and/or tax administration employees to support TRS applications and make necessary modifications.
• During this period, TRS provides an onsite team in the country of TRS installation.
• TRS can manage L1-L3 support initially, then TRS trains the partner and/or tax administration employees to provide L1-L2 level of support and keeps L-3 support. Based on the terms of the agreement with the customer TRS may continue to keep L3 support or transfer L3 support level to the tax administration.
• Application change requests can be considered separately based on the agreed price per hour for distinct types of DTT specialists.

How Long to Expect Implementation Results?

The time it takes to see implementation results from a TRS  project can vary depending on a range of factors, including the complexity of the project, the level of stakeholder engagement and cooperation, and the capacity and resources of the implementing agency. Here are some general guidelines for what to expect:

1. Short-term results. In the short term (within the first few months to a year), the implementation of a TRS can lead to improvements in tax administration processes, such as faster processing times, more accurate taxpayer data, and improved reporting capabilities. This can help increase tax revenue and reduce the costs of tax administration.
2. Medium-term results. In the medium term (within 1-3 years), the implementation of a TRS can lead to more substantial improvements in tax compliance and revenue collection. This can be achieved through measures such as better taxpayer segmentation, more effective enforcement mechanisms, and improved taxpayer services.
3. Long-term results. In the long term (beyond 3 years), the implementation of a TRS can lead to sustained improvements in tax compliance and revenue collection, as well as improvements in taxpayer trust and confidence in the tax system. This can be achieved through ongoing efforts to strengthen tax administration processes, improve taxpayer services, and promote greater compliance culture.

The timeline for implementation results can vary depending on the specific goals of the TRS project and the context in which it is being implemented. In addition, the success of a TRS project may also depend on factors such as political will, stakeholder cooperation, and the availability of resources and technical expertise.

We provide expected implementation timelines for each TRS product in product-specific documents.

What are the Sources of Funding for TRS Implementation Projects?

The sources of funding for TRS implementation projects can vary depending on the specific project and the country in which it is being implemented. However, here are some common sources of funding for TRS implementation projects:

1. Government budget. Governments may allocate funds from their budgets to finance the implementation of a TRS. These funds may come from general revenue sources or dedicated tax revenue streams.
2. International organizations. International organizations such as the World Bank, International Monetary Fund (IMF), and the United Nations Development Programme (UNDP) may provide funding or technical assistance for TRS implementation projects in developing countries.
3. Bilateral aid. Some developed countries may provide bilateral aid to support TRS implementation projects in developing countries.
4. Public-private partnerships (PPPs). PPPs can be used to finance TRS implementation projects, where the private sector partner contributes funds or resources to the project in exchange for a share of the project’s revenue.
5. Loans. Governments may take out loans from international financial institutions or commercial banks to finance the implementation of a TRS.
6. User fees. In some cases, the implementation of a TRS may be funded through user fees, such as charges for using online tax services or for processing tax payments. For example, retailers may pay annual fees for transmitting data from online electronic cash registers (OECRs) to the tax administration information system.

The sources of funding for TRS implementation projects may also come with conditions or requirements, such as the need to meet certain performance targets or to implement specific reforms.

What are DTT’s Plans for TRS Technical Architecture Future Roadmap?

Our free e-book titled “Digital Tax Administration” includes several articles on the subject. You can download it from: https://taxtech.digital/digital-tax-administration-collection-of-articles/ 

TRS technical architecture future roadmap includes the following elements:

1. Cloud Adoption. Migration to cloud infrastructure is a common trend. We leverage private or virtual private cloud services for scalability, flexibility, and cost-effectiveness while keeping data inside the tax authority’s perimeter and under full control.
2. Data Analytics and AI. Incorporating advanced analytics and artificial intelligence (AI) capabilities into the TRS to improve tax compliance, fraud detection, and data-driven decision-making. Implementing machine learning models for more accurate tax gap analysis, risk management, revenue prediction, and resource allocation.
3. Enhanced Security Measures. Ongoing enhancements to cybersecurity measures to protect sensitive taxpayer data from evolving threats. This includes implementing advanced authentication methods and encryption.
4. User Experience (UX) Improvements. Continual improvement of the user interface and user experience to make it more user-friendly and accessible for taxpayers and tax officers, based on users’ feedback.
5. APIs Expansion. Expanding the range and capabilities of REST APIs to facilitate secure data exchange and allow push capabilities with third-party systems, such as financial institutions, digital platforms, and other government agencies.
6. Mobile Accessibility. Ensuring that taxpayers can access TRS services via mobile devices through responsive web design or dedicated mobile applications.
7. Data Standardization. Standardizing data formats and taxonomies to improve data quality, exchange, and reporting capabilities.
8. Compliance with Regulatory Changes. Adapting to changes in tax laws and regulations, including international tax standards, and ensuring the TRS remains compliant.
9. Integration with Other Government Systems. Strengthening integration with other government systems, such as customs, immigration, business registration, and registers to streamline processes and reduce duplication.
10. Advanced Reporting and Analytics. Providing more advanced reporting and analytics tools for tax authorities to gain insights into taxpayer behavior and revenue collection.
11. Blockchain and Distributed Ledger Technologies. Exploring the use of blockchain and distributed ledger technologies for secure and transparent transaction recording.
12. Data Privacy and Personal Data Protection Compliance. Ensuring compliance with data privacy regulations, like GDPR, and protecting taxpayer information.
13. Improved Performance, Scalability, High Availability, and Fault Tolerance. Enhancing the TRS architecture to manage increased loads during peak tax periods and provide high availability and accelerated data recovery capabilities.

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[1] DMTA is planned for release later in 2024.

[2] For more details on VAT fraud methods, see: Anatoly Gaverdovskiy. “VAT the Great and Terrible or the 5th Generation of VAT Administration System.” URL: https://taxtech.digital/2023/10/30/5th-generation-of-vat-administration/

[3] To read more about DTT solutions for tax administration in B2C, visit our web-site: https://taxtech.digital/category/digital-tax-administration/vat/tax-administration-of-retail-trade-en/

[4] To read more about the advantages of implementing return-free tax regimes, see: Anatoly Gaverdovsky. “Is there life without tax returns.” URL: https://taxtech.digital/2020/10/05/is-there-life-without-tax-returns/

[5] To read more about the advantages of implementing digital excise administration and track & trace systems, see: Anatoly Gaverdovsky. “Implementation of the National Product Marking, Tracking and Tracing System.” URL: https://taxtech.digital/2022/10/10/product-marking-racking-and-tracing/ 

[6] To read more about the role of the local governments in tax administration, see: Anatoly Gaverdovskiy. “Role of the Local Governments in Tax Administration.” URL: https://taxtech.digital/2022/03/11/role-of-local-governments-in-tax-administration/

[7] For more details, please refer to the following article: Anatoly Gaverdovsky. “Concept of Effective Tax Administration in the Digital Era”, URL: https://taxtech.digital/2020/06/23/digital-tax-administration-concept/