Digital services key as Govt aims to reduce NZ business tax costs

Greater use of digital services is seen as a key enabler in reducing business' costs of dealing with the Government by 25% within two years.

Greater use of digital services is seen as a key enabler in reducing business' costs of dealing with the Government by 25% within two years.

The statement is contained in a discussion document, “Making Tax Simpler – better digital services”, which is the second in a series of such documents looking toward a better tax administration system.

The two public consultations were announced by Revenue Minister Todd McClay at a function hosted by the Wellington Chamber of Commerce this week.

“We need tax administration to be simple to use, and new technology can help achieve that,” McClay says.

“This is an opportunity to stand back, look at our tax system as a whole and make changes that will simplify the system for the benefit of all New Zealanders.

"At the same time, we will modernise the technology that runs the tax system."

McClay says the Government is "already working" with New Zealand software development companies on solutions to "simplify and significantly reduce" the amount of time businesses spend on tax compliance.

"A large working group with 20 representatives from small, medium and large software developers has been meeting since October last year to co-design how GST and PAYE information can be transferred to IRD in the future," he adds.

"In tandem, IRD is working with MYOB and Xero on how we can simplify tax processes fo;r small businesses.

“The scale of the change proposed for the tax administration is unlike anything we've contemplated before and the proposals contained in the consultations launched today will affect us all at same level.”

McClay's comments on the large working group led one attendee, AMS CEO Noel Reid, to observe during question time that IRD was paying overseas consultants but local software participants were contributing for free.

In response to another question, McClay says the first deliverables are likely next year, possibly early wins from work with MYOB and Xero.

The document also notes that current Inland Revenue digital services have significant limitations, existing as standalone services that are not integrated with other activities that customers carry out, such as dealing with their bank or using their business accounting software.

Also, they do not integrate with other government services, and they do not always provide the same level of functionality as other channels.

It notes that some customers will not be able to adopt digital services and some may choose not to. The Commissioner of Inland Revenue could work alongside affected groups to encourage and support them to adoopt digital services but also has the power under legislation to require the use of digital services.

McClay says currently tax compliance could be as much as 2% of GDP.

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