Creating an electronic tax administration system in Zambia

Abstract

In 2012, the Zambian Revenue Authority (ZRA) put together a project team to guide the development and delivery of a new electronic tax administration system, called TaxOnline, to replace an inefficient, fragmented system that relied on processing tax registrations, returns, and payments by hand, using paper forms. The revenue authority had contracted with Tata Consultancy Services, a private vendor, to develop a software system, which adapted an e-tax model built for Uganda to the Zambian system. The project team was responsible for creating blueprints to guide the developers’ work, testing the system, training internal staff and educating taxpayers, and encouraging people to embrace the new system.

Development Challenge: The primary purpose of TaxOnline was to increase the efficiency and effectiveness of tax administration in Zambia and thereby improve revenue collection. An electronic tax administration system would make filing tax returns and paying taxes a less cumbersome process and eliminate the need to physically visit a revenue authority office. These improvements could increase taxpayer compliance. The new system could provide better data to allow tax officials to identify taxpayers or potential taxpayers who were skirting their tax obligations by withholding information from the ZRA. Officials also hoped TaxOnline would bring more people working in the informal sector into the tax net.

Project Solution: The Zambian Revenue Authority contracted with a private firm to purchase an electronic tax administration system. In 2012, the authority created a project team to oversee implementation. The team identified the features and functions needed in the system through consultations with revenue authority staff and created blueprints to guide the work of the private firm, which developed the system. The team arranged for staff to test parts of the system as it was rolled out, trained staff on how to use the system, and educated taxpayers on the coming changes. After the system went live, the team arranged for continued assistance and education to taxpayers.

Project Results: In less than one and a half years, in October 2013, the TaxOnline project team delivered an electronic tax administration system. Instead of processing registrations, returns, and payments manually and using paper forms, users could carry out their tax activities online. The usage of TaxOnline’s electronic services steadily grew over time. In 2017, a total of 1,987,675 returns were filed electronically while only 49,977 returns were filed manually. By 2019, over 90 percent of registrations were processed electronically and around 70 percent of payments were submitted to ZRA electronically. The time it took for filing, payment, and processing of tax returns dropped from 10 to 16 days before the system launched to within one day in 2014. The system strengthened taxpayer compliance and provided a wealth of data for the revenue authority.