Giving up tax returns and replacing them with data-based information exchange is a long-term objective of the Estonian Tax and Customs Board, the director of the tax authority, Valdur Laid, says.
“Our vision is to do away with all sorts of declarations altogether. Being a strong e-state, we very easily have the capability to receive from business software or from third parties – such as banks – the information based on which we can calculate businesses’ tax obligations. We could send businesses an e-invoice and also debit their account when we have their consent,” the national tax chief said at a conference held within the framework of the events of the International Accounting Day.
“Elements for this exist in the form of machine/machine interfaces, and we have several different projects underway by which we are moving in that direction already. This is not an obligation, but an opportunity to reduce bureaucracy,” he added.
The first major project in this is “Aruandlus 3.0” (“Accounting 3.0”), which is carried out in collaboration with Statistics Estonia and the Bank of Estonia.
“When the project launches in 2018, no more declarations related to workforce and pay must be filed by a person thanks to machine/machine interfacing, as these data will be retrieved directly from the systems,” he said.
Another important novelty highlighted by the head of the tax authority is a tool made available by the new Public Procurement Act to reduce the payment of under-the-table wages in the construction sector.
“It is now possible to eliminate payers of very low wages from public procurement tenders. A look at construction tenders now reveals that a quarter of the companies taking part in them pay their workers less than 70% of the sector’s average, which in our view indicates payment of cash-in-hand wages,” Laid said.
He said the tax authority expected important changes to take place in this, as Estonian municipalities made up approximately 60% of the contracting authorities in such tenders.
“By systematically concluding contracts with companies which pay cash-in-hand wages we cut away the tax revenue that otherwise would reach municipalities. Additionally we undermine the role of the state in laying the foundation for good public sense of justice,” Laid added. (ERR/Business World Magazine)