Come January 2, 2009, persons conducting business with the Barbados Inland Revenue Department (IRD) will be able to do so from their offices, the comfort of their homes or any place that is convenient to them.
That is because the IRD will be the first such department in a CARICOM country to develop a comprehensive and modern tax administration system that will be fully Internet-oriented.
According to Senior Inspector of the IRD, Neville Clarke, electronic filing is being introduced for a number of reasons, the most important of which, is to improve the quality of service offered to the taxpayer and correspondingly increase compliance with the tax laws.
“We have had a computerised system since 1978. We had an upgrade in 1995 and with the change in technology, it was the natural way to go. We have to make sure that we can meet all the challenges of the current economic climate. Given the global atmosphere that we are in, we need to make sure that we can maintain all the things that we want to, increase compliance, and make sure that all the taxpayers are satisfied with the services that we offer,” Mr. Clarke explained.
He revealed that a number of secure services would be made available to taxpayers with the introduction of the new tax administration system. For example, they will be able to register online, prepare and file their tax returns (including reverse tax credit) and information returns (starting from the 2008 income year), authorise third parties or tax agents to file on their behalf, request Tax Clearance Certificates, file objections and query the status of their returns.
In addition to the services being offered, several benefits are expected to be enjoyed by the taxpayer as a result of electronic filing, including faster processing of income tax returns. This is considered of great importance to the taxpayer, since a large percentage of the returns that are filed with the IRD are refunds.
Mr. Clarke also pointed out that the use of paper had presented significant challenges for both taxpayers and tax administrations, with increased instances for manual calculation errors and keying mistakes while the data was being captured.
“When a taxpayer files a return or any information with us, that information has to be converted to electronic format and that means a person entering the information. There is always a problem of errors when people do things like this. That will be a thing of the past as well. When we make a mistake, the taxpayer has to object and then we have to go through the process again, so that is a saving in time to the taxpayer as well,” the Senior Inspector explained.
“We are also expecting that the employers who file the returns and information electronically will be able to save money. Currently, persons who send in the TD5 slips are required to print four copies. Now, with this new system, they can print just one copy for the taxpayer and they can send the file to us electronically. That is a big saving in terms of the cost of paper,” he added.
The taxpayer will also save on paper with the new system. Under the present system, the taxpayer is required to submit copies of the TD5 slip, all the copies of information on mortgage interest, repairs, insurance etc. However, as noted by the IRD’s Senior Inspector, that will be a thing of the past. “The person will file the document electronically and we will look after the rest of that,” he stated.
Another likely benefit of electronic filing is increased efficiency on the part of the IRD. Presently, Mr. Clarke said, the processing of returns was very time consuming, with the cycle spanning February to October. He noted that with filing being done electronically, staff could be reallocated to other areas of critical importance.
“So we can get more done in less time, and we will be able to validate a lot of information more quickly. It is not as labour-intensive as filing paper returns and the other documents, plus it will save us a lot of space in filing. Currently, we have one floor dedicated to files and it is still inadequate,” he remarked.
He stressed, however, that while the IRD expected that electronic filing would quickly be adopted by most persons, the traditional method of filing income tax and information returns on paper, as well as other paper-based services would remain available.