Policy Context and Legal Framework

The following policy contexts and strategic frameworks govern the project:

Malta Information Technology Agency (MITA) – executing the realisation of the Smart Island Initiative (http://www.epractice.eu/en/cases/thesmartisland)

MITA envisions being the central driver in the evolution of Malta into a world class information society and economy.  MITA harnesses the wave of technology innovation to take government business and service delivery to a new level: focus on the citizen, service personalisation, multi channel delivery, virtualisation and aggregation.  This transformation is complemented with the rationalisation of resources and the reengineering of business processes, improving speed of delivery, and providing cheaper and leaner services.

The Ministry of Finance has implemented a number of reforms in the Taxation sector.  Since 1996 MITA under its previous forms has been the natural choice of the Ministry of Finance in the implementation of information systems projects critical to the success of these reforms in the Inland Revenue Department (IRD).

Along these years MITA project teams have collaborated with Inland Revenue management in extensive business process re-engineering projects.  The highlights of the tax reform programme were:

• Upgrading the Pay As You Earn (PAYE) system into a Final Settlement System;
• Self Assessment system including the introduction of a Tax Declaration form in lieu of the normal income tax return;
• The application of a new penalty regime and interest charges on both unpaid tax balances and un-refunded balances,
• Year by Year processing including the issue of refund payments within six months from the return due date.
• A corporate tax reform programme.  

This programme prepared the way for the implementation of the e-Government project presented for these awards.  Through this project IRD aimed to achieve a significant improvement in services given to taxpayers, employers and tax practitioners whilst improving internal operational efficiency. 

The improvement of services to taxpayers and the implementation of e-commerce applications were components of initiatives at a national level such as The Public Service Reform Programme, the e-Government Programme, The National Reform Programme in relation to the EU Lisbon Agenda and Better regulation: reducing the administrative burden for businesses

Building on these successes, MITA will spearhead the development and aggregation of core information systems into a framework of Clusters which share common thematic, business and administrative needs.

The agency will build a next generation e-Government platform, departing from the current vertical service-based approach and move towards the establishment of a platform through which  secure and reliable services  are  deployed  at  source  by  the public service provider in a streamlined and open standards environment as a common technology denominator both at policy and operational level. 

IR Services Online is well positioned to be a pivotal starting baseline that forms part of the Revenue and Administration Cluster, and is committed to lead the way in delivering Software as a Service.

Implementation and Management Approach

The ultimate objective of IR Services On-Line to improve taxpayer services required the vision to re-engineer business processes, re-write legislation and collaborate with key stakeholders to simplify the approach for all taxpayers to fulfill their obligations by leveraging the potential of e-Government applications. 

This project was spearheaded by the Commissioner of Inland Revenue himself and the management team included the Information Systems Project Manager (from MITA), Director Operations and Director Legal and Technical who involved various section heads, technical persons, business analysts and software engineers to ensure that tasks are delivered timely.  A number of tasks included internal meetings with operational staff to ensure commitment and reduce resistance to change.

Processes that required review were interlinked and interdependent and impact on the critical business process through which income tax returns are processed, tax is calculated and claims or refunds issued to taxpayers. 

Process engineering starts very early every year with representation from administration, delivery arms, legal and information systems. The tax return process has to promptly implement policy adjustments announced in the annual budget speech.

The coordination levels required to succeed in this project were achieved through a collaborative team approach at the highest levels.   Subcommittees report back at the stock-take meetings, Commissioner of Inland Revenue and Project manager were constantly available for direction with ad-hoc issues discussed with all  concerned during  stock  take meetings,

Externally the Inland Revenue collaborated with the Malta Institute of Accountants to achieve the understanding of service levels expected by taxpayers both from a self service aspect and through their tax practitioners.  This reduced resistance from external users and shared the understanding where each one stands to benefit.  The same approach was used with the Notarial Council and with Employers.  Presentations and hands on sessions were provided by the Inland Revenue to key users to achieve success in the implementation.

The Inland Revenue used the diffusion of innovation method rather than a “big bang” approach.  E-Services were released regularly in an incremental fashion.  Users provided feedback to the project team on the services and suggestions were often implemented during the next release.  Tax Practitioners were the innovators who spread the word that e-services for Corporate Taxpayers were reliable, secure and provided effective service.  Subsequently large employers did the same for e-service related to employers.  With each release the take up within target sectors increased.

Through this approach the Inland Revenue could manage the implementation of back office application changes (e.g. fiscal policy changes, euro changeover) with releases of online services. 

The incremental approach also helped to manage both technical and business process risks especially in the early stages of the implementation. 

Risks were managed through business process reviews with the stakeholders to resolve issues related to process simplification by reducing filing requirements.  The e-filing process was reviewed to provide comforts to Tax Practitioners, Taxpayers and Employers that risks related to registration and authorization of users and taxpayers, signatures and the desktop technology used (spreadsheets) were minimized. 

Legal experts mitigated risks through enactment of subsidiary legislation (Electronic Communications Income Tax Regulations) to complement the Electronic Commerce legislation. 

ICT Management addressed concerns for security through the use of Public Key Infrastructure, Secure Socket Layer and digital signatures on spreadsheets.  The technology design ensured scalability and resilience and had the foresight to plan and subsequently implement for web 2.0 features.  Projects developed by MITA (including this one) follow a PRINCE2 project management methodology.  Internal reviews and project management were done within this structure.

Multi channels reduced the risk of increasing costs for businesses.  Following discussions with stakeholders, a cost neutral baseline for submission through website was established.  Subsequently development of web services’ was released to give taxpayers the option of enhancing their third party applications (e.g. payroll) to interact with the e-services.  Additionally spreadsheets were also developed to interact with these web services, providing another delivery channel, familiar with the user base.

The project provided opportunities for team members to develop cross functional knowledge.  The IT project team worked closely with internal and external business users.  The business team collaborated with the project team and shared knowledge on the application of IT as a business tool.   Technical and business challenges emerged that tested the team’s resilience to achieve objectives. 

As work unfolded Inland Revenue appointed an Assistant Director responsible for e-Business within the Operations’ Directorate, whilst within the IT project team, software developers progressed into career paths of Software Engineers and Specialists or Business Analysts.  This strengthened the Project Team structure for future developments.

Technology solution

The Inland Revenue (IRD) system is made up of software components which may be logically grouped into presentation, business, and data services.  This approach facilitates the exposure of IRD business services to other consumers, and improves interoperability between IRD services and third party data providers.  Use of tools and applications familiar with the user base is very important.  Refer to attached information for a schematic diagram of the design.

Presentation components: These provide a way for the user to interact with the application, view and capture information. User interfaces are implemented using forms, web pages, and Office business applications.

Business workflows: After the required data is collected by a user process, it can be used to perform a business process. For example, after the user inputs the tax return information, the amount of tax due can be calculated and payment of amount due may begin. Many business processes involve multiple steps that must be performed in the correct order and triggered as required. Business workflows define and coordinate long running, multi-step business processes.

Business entities: Data is required to be passed between layers. For example data on a particular taxpayer and its type and attributes is passed between the business components. Entities represent real-world business personas, such as an employer or company. The business entities are usually represented as data structures, Object Oriented classes or XML messages.

Service interfaces: Business logic is exposed through service interfaces that support message-based communication, and standard protocols.  For example, the payment authorization service must expose a service interface that describes the functionality offered by the service and the required parameters for calling it. This is achieved through the use of web services.

Service components: When a business component within the IRD system, needs to use functionality provided by an external service, code needs to be provided to manage the communication with that particular service.   Service components may also be used to call different services from within the IRD system, for example, trigger batch processes. They also provide additional services, such as basic mapping and transformation of data formats. This layer will eventually be replaced with an enterprise service bus.

Data access components: These are made up of classes and stored procedures and provide access to the databases.  A centralised data access layer is easier to secure and maintain.

Components for security and operational management: These components perform exception management, authorize users to perform certain tasks, keep activity logs, and manage sessions and threads.  Digital certificate handling, cryptographic operations and SSL tunnels are initiated through this layer. 

Impact

The impact of e-Services on the various target groups is outlined below. The volume of transactions made on line has been sustained over years for the corporate tax returns, services for employers and payments processing.

Corporate Taxpayers

Nearly all Tax Practitioners use the services available for Corporate Taxpayers. Furthermore the information gathered on the Financial Statements of all companies is uniform and structured such that proper analysis of accounting ratios can be done consistently and with little risk of interpretation or error in capture by the users. The preprogrammed spreadsheet prevents most errors as information is not exported. The use of the service is as follows:

*Deadline is 21 November 2009.

Tax Practitioners made the number of enquiries on taxpayer accounts of their clients as shown below:

This data represents the number of taxpayers whose account information (statements, payments etc) was viewed by their Tax Practitioner. The instances of viewing count each time an information screen has been view by the taxpayer.

e-TPS Taxpayer Services

Tax Practitioners also submitted 2343 Registration for Refund using the e-TPS application since April 2008.

Employers

The number employers in the target sector who submit employee end of year information online increase year on year.

The number of errors represents errors that were corrected online by employers rather than at the back office of the Inland Revenue, hence improving the quality of information.

*2008 cycle still in progress

Service related to submission of engagement and termination forms to Inland Revenue and Employment and Training Corporation has been implemented since May 2009 and no information is available.

Information about payments made by employers is included in the Payment data below.

Data Providers to Assist Taxpayers

During January 2009 the Inland Revenue launched an online service for the 165 (private schools, child-care, language schools, elderly homes, and agricultural payors). 8 providers used the service to submit online over the Internet. Another 138 provided the information on magnetic media. Total number of records submitted amounts to 18368, out of which 744 were received online.

Individual Taxpayers

Non Filers

As the Inland Revenue enabled businesses to submit information about taxpayers online, faster turnaround times to process information and better quality information made it possible for the Inland Revenue to process electronically the Tax Statements of individual taxpayers without the need for these taxpayers to submit any information to the Department. Initiated during 2007 this initiative has produced the following results:

 * 2009 in progress

Thus for 2008 (the last complete year), Inland Revenue managed to identify the income and deductions of 70% of the taxpayers with less than 1% error rate in information (Correction Forms) and with 1.42% of taxpayers requesting a Tax Return to declare additional information.

Tax Return Filing

* 2009 is in progress

This data represents the number of taxpayers who viewed their account information (statements, payments etc). The instances of viewing count each time an information screen has been viewed by the taxpayer or tax practitioner.

Payments

This analysis represents all payment types of tax and social security contributions. Payments are on the increase year on year. Inland Revenue provides online payments which are processed through a Government Payment Gateway (GPG). Taxpayers can also effect payments using the web sites of their commercial banks (Internet Banking - IBK).

* Up to May 2009

Notaries

Since June 2007, only 20 transfer forms have been received online.

Peak Usage

Services are monitored annually to ensure that during peak usage the response times are still prompt such that quality of service is maintained throughout the service period. The two most used services are those of companies and employers end of year submission whose peak usage (test and actual submissions) in a particular day usually the deadline submission date is:

* deadline is 21 November 2009

Track record of sharing

The project was described in detail within the document ‘Implementing Computerisation and Information Technology for Tax Administration’ issued in 2007 by the Commonwealth Association of Tax Administrators (CATA)  ISBN  978-0-9553540-2-1. 

This publication offers guidance to revenue agencies that are thinking of implementing computerisation or information technology to improve the efficiency of their tax administration. It draws on the experience of Australia, Malaysia, Malta, Pakistan, Singapore and Tanzania, representing a range of information technology initiatives of varying scales, complexity and levels of maturity. Rather than look at overall conceptual issues, which are already well covered elsewhere, this book looks at the finer details of implementation in order to identify lessons, ideas and opportunities, both at the planning and design phase, and during implementation and review and evaluation. 

Project experience is also shared when exchange visits are made with Tax Authorities of European Union member states under the FISCALIS framework.  Such visits have been made with Tax Authorities of Sweden, United Kingdom, Republic of Ireland and Finland.

The experience was also shared with delegations who visit MITA for fact finding visits, such as a recent one from St Lucia.   Similar approach to implementation was also recommended in a consultancy assignment the project team had with the Office of the Tax Commissioner in Bermuda.

The development team has been invited to deliver a presentation at the local Developer Days 2009 conference.  DevDays 2009 is an event for all developers, architects and other IT specialists who would like to learn more about particular technologies, products and best practice approaches. They were asked to share with other industry professionals their experience in implementing an Office Business Application at the Inland Revenue Department.

Within MITA, the project team is held in high esteem due to its success of the e-Services delivered and is usually the benchmark for the implementation of innovative ideas in the development or operational platforms.

Lessons learnt

·         Senior management must own the project and commit resources to the project from the outset.

·         The Re-engineering of the business (BPR) was crucial to the success of the project; the alternative to re-structuring and standardisation would have been the filing of images or word-processed documents within the system which would have added no value to the Tax Return submission process. 

·         BPR of the Tax Return process showed that by enabling the businesses to fulfil their tax obligations online, the other (e.g. employed) taxpayer population could also benefit by removing the requirement to file tax returns when information about incomes and deductions is known by Inland Revenue. 

·         The initial target audience i.e. Tax practitioners and large employers were the ideal innovators who used the system; they gave very good publicity to the e-services amongst their clients and colleagues.

·         The participation of Inland Revenue and MITA in information sessions given out by Audit firms to their clients helped in the propagation of a positive perception towards e-Government. The audience was presented with how the services will support their tax practitioners in giving them improved services.

·         Another important factor in the successful implementation of IR Services On-Line was the establishment of the Web Services Help Desk.

·         Critical to the implementation were the hands on sessions carried out at Inland Revenue with the audit firms and employers. Actions such as installation of digital certificates, logging in and using the secure site were shown to be doable by the target audience and hence were accepted.

·         Implementation of multi channels by allowing submission through either website or spreadsheets and in the case of payments using online web page and Internet Banking provides taxpayers with options that best fits their work practices, hence increasing service use.

·         There is great value in learning from others. The technical visits and the European Union assistance project provided important guidance to the project team who made significant breakthroughs throughout the whole implementation.

·         The perception of a secure and reliable site (e.g. use of PKI, SSL) and other security enhancing mechanisms) was a huge factor in the take-up of the service.

·         The technologies chosen for deployment must be confirmed (prior to project development) to be interoperable to allow for project evolution and scalability.

·         Implementing spreadsheets provided end users a familiar interface used in everyday work.  This resulted in a higher acceptance of e-services.  The familiarity with spreadsheets reduced the pressure on technical and end user support helpdesks.

·         It is important to present a complete package of services.  The e-service for notaries needs supporting e-services (including other organisations) to achieve success.

·         On-Line Tax Return filing of individuals has not taken off due to problems in making available e-ID and due to the fact that Tax Returns are not issued early enough (due to backdated initiatives) such that a proper publicity campaign can be launched.