4. Assessment

The tax assessment function includes all activities related to processing tax returns, including issuing assessments, refunds, notices and statements. It also includes the processing and banking of payments. These activities continue to be an area of significant change and focus as administrations look to take costs out of high-volume processes.

As reported in previous editions of this series, the widespread enabling of electronic filing and payment by taxpayers has helped administrations to reduce their costs and improve the services they provide. This trend has continued with an increasing range of supporting services and options now also being made available.

Tax administrations are also managing an expanding range of data that administrations are collecting electronically, including from a growing number of third-party organisations. This is facilitating a shift towards more intelligent use of data, and more complete pre-filled returns, increasingly driven by the use of artificial intelligence and machine learning. This is also helping to create more upstream compliance approaches that can minimise or prevent errors in returns. As well as updating information on the channels used for filing and paying, this chapter will outline:

  • Administrations’ efforts to provide pre-filled returns for individual and corporate taxpayers, including the expansion of this approach by some into “no-return regimes”;

  • The levels of on-time return filing and payment; and

  • Examples of how technology and the application of data sciences have improved filing, payment and refund processes.

With digitalisation continuing to transform everyday life, it is unsurprising that the uptake in the use of e-filing and payment channels continues to grow. Table 4.1. provides average e-filing rates from jurisdictions that provided details of channels used by taxpayers to file for the years 2018 to 2021. Over that period, around 95% business taxpayers filed their returns electronically. For personal income tax return filers this figure is above 85%. Also, it should be noted that for a significant number of administrations a 100% e-filing rate is the reality across the three main tax types (see Table D.23.).

Looking at the evolution of e-filing rates over the period 2014 to 2021 shown in Table 4.2., it is clear that e-filing rates have increased significantly – between 17 and 21 percentage points – across the three main tax types. (It should be noted that the table only takes into account information from jurisdictions for which data was available for both years 2014 and 2021, which explains the differences in 2021 averages shown in Tables 4.1. and 4.2.)

As for electronic payments rates, as can be seen in Table 4.3., around 90% of payments, measured by number and value, were made electronically in 2021. This represents a significant increase since 2018. The percentage of e-payments by value is slightly higher than the percentage of e-payments made by number, suggesting that particularly larger taxpayers make use of this payment channel. (Due to a change in the definition of the underlying survey question, it is not possible to look at the evolution of e-payment rates since 2014.)

There remain a number of jurisdictions where the volume of returns filed using paper as well as payments through non-electronic means remains high. Among those jurisdictions that provided data, more than 57 million returns (for PIT, CIT and VAT) were still filed on paper (see Tables A.83., A.85. and A.87.). However, this is a significant reduction compared to the years prior to the COVID-19 pandemic.

It is to be expected that this figure will further decline over time as more administrations take steps to encourage more taxpayers to use electronic platforms where possible. This will not only lower administration costs but could also reduce the administrative burden on taxpayers over time.

One of the significant innovations in tax return process design over the last two decades has been the development of pre-filled tax returns, often for personal income taxpayers. The pre-filled approach involves administrations “pre-populating” the taxpayer’s return or on-line account with information from third parties. The pre-filled return can be reviewed by the taxpayer and either filed electronically or in paper form. (Table 4.4. shows that an increasing number of administrations is pre-filling PIT returns.)

As the extent of pre-population is generally determined by the range of electronic data sources available to the administration, it is critical to this approach that the legislative framework provides for extensive and timely third-party reporting covering as much relevant taxpayer information as possible. The complexities of the legal frameworks governing tax can be a barrier to more automated tax calculations, and to help overcome this some tax administrations are exploring the use of machine-readable legislation which can help automate the calculation process through the use of algorithms. This is leading to reduced errors and reduced burdens for taxpayers.

Advocates of pre-filling initially encouraged its use with individual tax regimes that allowed relatively few deductions and credits, and where they could be verified with third party data sources. Advances in rules-based technologies, information-reporting requirements and the application of data science techniques mean that the approach can now be considered more widely. For example, survey responses show that in many jurisdictions PIT returns are pre-filled with different income information and deductible expenses such as donations, school and university fees and insurance premiums (see Figures 4.1. and 4.2.).

In a growing number of jurisdictions, this concept now goes as far as totally pre-filling PIT returns, which the taxpayer then has to either agree (which may be by deemed agreement after a certain period of elapsed time) or provide further information which may lead to an upwards or downwards adjustment (see Table A.84.). In their most advanced form, complete pre-filled returns are being generated for large proportions of the individual tax base. In addition, the availability of technology solutions and approaches, such as electronic invoicing systems, allows tax administrations to start to go beyond PIT returns and pre-fill corporate income tax (CIT) and value-added tax (VAT) returns (see Tables A.82. and A.86.).

The latest pre-filling developments in some jurisdictions are described in Box 4.2.

As the levels of data available to support pre-filling grows, tax administrations are able to develop predictive techniques that can spot errors that taxpayers make as they finalise their return, and also prevent non-compliance. Examples of this have been included in previous editions. See, for example, Box 4.3. in Tax Administration 2022 (OECD, 2022[1]). These can be combined with techniques to prompt action, creating whole new approaches to compliance which are bringing the compliance work ‘upstream’ into tax administration processes, as Box 4.3. highlights.

Even allowing for changes occurring because of pre-filled or no-return regimes, the filing of a tax return is still the principal means by which a tax liability is established and becomes payable. As a result, the on-time filing rate is seen as an effective measure of the health of the tax system as well as the performance of the tax administration itself.

Table 4.4. summarises on-time return filing for those administrations able to supply information by tax type. Apart from CIT, the rates are around 85%. The lower rates for CIT may be explained through more complexity in the corporate income tax system and the preparation of financial statements and year-end reports.

Table 4.5. shows the evolution of on-time filing rates. On average, this has remained broadly static between 2014 and 2021, although the underlying data for on-time filing shows significant variation in the evolution of on-time filing rates between jurisdictions. In relation to the recent years 2020 and 2021, this may also be a reflection of the different responses that jurisdictions had to the pandemic. The 2020 report Tax Administration Responses to COVID-19: Measures Taken to Support Taxpayers highlighted how some jurisdictions may have required on-time filing, for example to pay out refunds or to provide other government benefits, but allowed delayed payment, while some may have relaxed penalties for late filing (CIAT/IOTA/OECD, 2020[2]).

Overall, it is encouraging that despite the impact of the pandemic on-time filing rates remained stable (except for a few jurisdictions, see Tables D.21. and D.22.). It should be noted that the table only takes into account information from jurisdictions that were able to provide data for both years 2014 and 2021, which explains the differences in 2021 averages shown in Tables 4.4. and 4.5.

The variation of on-time filing rates by jurisdiction are also visible in Figure 4.3. which shows the range of on-time filing rates across major tax types. For a number of jurisdictions this range is significant.

Given the impact on compliance rates, many tax administrations are turning to behavioural insight techniques to try and encourage more timely and accurate filing. This is seeing promising results, with tax administrations reporting that ‘nudges’ at key points in the filing process can increase the timeliness of filing. Not only is this improving compliance rates but it is also freeing up resources that can be used elsewhere.

Payment of tax constitutes one of the most common interactions between taxpayers and tax administrations, especially for businesses that are typically required to regularly remit a variety of payments covering both their own tax liabilities and those of their employees. Administrations continue to make progress in increasing the range of e-payment options available to taxpayers and to increase their use. This progress not only lowers the cost to the administration, it can also increase on-time payments and reduce the number of payment arrears cases by providing improved access and a better payment experience. One significant development is the growth of payment facilities being built into the natural systems of taxpayers. This is making payment more seamless for taxpayers as they can use their existing banking or accounting software to make payments.

On-time payment rates for those administrations able to supply information by tax type are summarised in Tables 4.6. and 4.7. Table 4.6 shows that in 2020 and 2021 on-time payment rates have fallen when compared with years 2018 and 2019. The range of on-time payment depicted in Figure 4.5. shows a significant gap in on-time payment across the main tax types for a number of jurisdictions, in some cases above 50 percentage points.

This reduction in on-time payment rates is almost certainly an impact of the pandemic, reflecting the cash flow challenges businesses and individuals may have had. It may also reflect the numerous easements some tax administrations gave on payment timeliness to assist with the challenges of the pandemic, for example where taxpayers may have been required to file on time but had longer time to pay.

Future editions of this report will continue to track these trends, and recovering and increasing on-time payment rates should remain an area of focus for administrations given the amounts of revenue involved. This is why some tax administrations report investing resources in this area, to make payments easier and more in real time as can be seen in the example in Box 4.5.

Given the underlying design of the major taxes administered (i.e. PIT, CIT and VAT), some element of over-payment by a proportion of taxpayers is unavoidable. Excess tax payments represent a cost to taxpayers in terms of “the opportunity cost”, which is particularly critical to businesses that are operating with tight margins where cash flow is paramount. Any delays in refunding legitimately overpaid taxes may therefore result in significant “costs” to taxpayers.

Table 4.8. shows the different treatment of VAT refunds, and highlights that the majority of administrations pay out refunds immediately. This is helpful to business but tax administrations need to continue to be cognisant of fraud risks. Tax regimes with a high incidence of tax refunds are particularly attractive to fraudsters (especially via organised criminal attacks) necessitating effective risk-based approaches for identifying potentially fraudulent refund claims.

During the COVID-19 crisis, the importance of paying out refunds quickly was a key issue for many governments, as a significant number of taxpayers were facing severe cash-flow problems. Tax administrations responded to this by prioritising refund applications or adapting refund processes, in some cases fully automating them. (CIAT/IOTA/OECD, 2020[2])

The learning from both the pandemic and previous approaches is now being combined with advances in technology, and the growth of data science to provide tax administrations with new options to mitigate risks and simplify processes. This can lead to reduced administrative and compliance burdens, and the creation of new innovative approaches which can be seen in Box 4.6.


[2] CIAT/IOTA/OECD (2020), “Tax administration responses to COVID-19: Measures taken to support taxpayers”, OECD Policy Responses to Coronavirus (COVID-19), OECD Publishing, Paris, https://doi.org/10.1787/adc84188-en.

[1] OECD (2022), Tax Administration 2022: Comparative Information on OECD and other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/1e797131-en.

[3] OECD (2019), Tax Administration 2019: Comparative Information on OECD and other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/74d162b6-en.

[4] OECD (2017), Tax Administration 2017: Comparative Information on OECD and Other Advanced and Emerging Economies, OECD Publishing, Paris, https://doi.org/10.1787/tax_admin-2017-en.

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