SAT expects 100% online declarations by 2008

Mexico's tax office SAT expects all contributors to be declaring their taxes online by 2008, assisted by its new technology platform, SAT general administrator for taxpayer assistance Nora Caballero told BNamericas. Online declaration is compulsory for two groups of taxpayers: corporations, which are obliged to file their declarations in March; and persons that earn more than 300,000 pesos per year (US$27,000), who are obliged to file them before May 2. The online tax system was introduced in 2003, and it is estimated that approximately 2.5 million taxpayers now fall into the categories that are obliged to declare online. SAT has not estimated the number of compulsory online declarations there will be in 2008, but it will be "significant", Caballero said. "Currently there are a lot of professionals including medics, lawyers and freelance workers that are obliged to pay taxes but do not fit into the two categories above," Caballero said. Online declarations do not actually go through the SAT website itself, but via a link on the local banks' websites. However the SAT site does deal with digital signature applications. Alternatively, people can file declarations and pay dues at bank branches, rapidly identifying themselves with a smart card that SAT introduced in 2003. The smart card contains all the taxpayers' relevant information and saves considerable time and paperwork for both the bank and taxpayer. But it is only part of a longer-term strategy to strongly encourage the taxpayer to move towards electronic payment. TECHNOLOGY PLATFORM SAT's goal will be greatly facilitated by the organization's new US$50mn technology platform being implemented by US enterprise application developer PeopleSoft (Nasdaq: PSFT) (recently acquired by Oracle) and due for launch in 2006. The necessity for an upgrade became apparent in January this year when SAT was overwhelmed by advanced electronic signature applications. With the new system, the weight of receiving online tax forms will register as no heavier than an email with a small attachment, or 120kb rather than the 17Mb that online declarations weighed last year, project director Jorge Luis Ibarra told BNamericas. The two main purposes of the platform are to save both SAT and the user time and money. It is designed not only for those that are obliged to declare online but to encourage those not obliged to do so, he added. The cost of not putting government services online would be felt hardest by the economy in general, according to Ibarra. "We are not only talking about the cost of chasing people up for not declaring online, but also about the implicit costs, the costs of opportunity this has for our economy and country. This is the most important point," Ibarra said. This point is shared by Juan Rada, senior vice president of applications and industries for Oracle EMEA (Europe, the Middle East and Africa). "The challenge is to change the concept of online tax offices from being an instrument of money collection to one of a service to help promote productivity. I think that once [governments] change that concept, companies such as Oracle can help them more in restructuring [their technology platforms]," Rada told BNamericas. Caballero, Ibarra and Rada were panelists at a conference on technology and tax services in Chilean capital Santiago, April 26-27.