Digital Transformation Maturity in Today’s Tax Landscape

Posted by:
Sahil Sidhwani

Publish Date:
5 Dec, 2023

Tax authorities worldwide are embracing Digital Transformation to streamline operations and enhance taxpayer and employee experiences. However, assessing the effectiveness and progress of these IT projects is crucial for success to identify the current state.

To help, the Organization for Economic Cooperation and Development (OECD) has introduced the 'Digital Transformation Maturity Model’ - a valuable tool for tax authorities. The maturity model, outlined in the OECD's publication, is a structured framework to evaluate and analyze the digital maturity within tax administrations.

What is the Digital Transformation Maturity Model?  

Recommended by the OECD, the digital maturity model is a self-assessment tool to help tax authorities understand where they are and where they want to be. It’s designed to identify capabilities, pinpoint areas for improvement, and establish a Digital Transformation roadmap.

With rising demand for more efficient and technology-driven tax processes, the OECD recognized the need for a standardized model to measure progress. Aiming to assist tax authorities in navigating a changing virtual landscape, the Digital Transformation Maturity Model includes distinct stages of maturity.

What are the prescribed levels of maturity? 

The OECD's Digital Transformation Maturity Model categorizes tax administrations into five distinct maturity levels:

1.  Emerging: These organizations have developed to an extent but have significant room for digital progress. This level focuses on what’s in place, while noting potential limitations.

2.  Progressing: These organizations have undertaken digital reforms towards the average level of advanced tax administrations.

3. Established: This level represents where many advanced tax administrations might be expected to cluster.

4.  Leading: These administrations represent the cutting edge of what’s possible at the present time.

5.  Aspirational: This level focuses on the long-term vision, towards more seamless and increasingly real-time operations. Currently, no tax administration is expected to be consistently at this level.

Digitalization and Digital Transformation are key elements of the maturity model. Digitalization replaces paper processes with digital methods, improving efficiency while reducing operational costs. Digital Transformation involves more significant changes in how tax authorities operate and adapt to changes in citizen interactions and business conduct while addressing the needs of the taxpayer community.

TRM Graphic

The model is structured around six key themes, which align with the framework set out by the OECD. These include: Digital Identity, Taxpayer Touchpoints, Data Management and Standards, Tax Rule Management and Application, New Skill Sets, and Governance Frameworks.

Self-assessment results published by OECD 

Tax authorities around the world have conducted self-assessments using the parameters outlined in the Digital Transformation Maturity Model and submitted their results to the OECD. The results are anonymized to remove any influence on tax administrations by outside factors, and to reinforce the model’s primary purpose as a self-assessment tool to support a more informed future strategy.

The OECD’s Digital Transformation Maturity Model is a crucial resource for tax authorities that want to thrive. Assessing maturity levels, and the ability to make comparisons with other tax administrations, can help you understand which level is the right one for your organization in review of the results of your peer groups.

Our consultants are committed to help tax authorities conduct and submit self-assessments to the OECD, ensuring compliance with global standards. Our experts empower authorities with the tools and technology needed to navigate taxation operations and comply with the OECD's Digital Transformation Maturity Model as a target vision.

invenioLSI plays a pivotal role in assisting tax authorities on their Digital Transformation journey. We helped Fiji Revenue & Customs Service (FRCS) introduce a digital platform from scratch to support the OECD maturity model pillars to enhance compliance, simplify business processes, and create a customer-centric experience for over 900,000 Fijian citizens, starting the Digital Transformation vision in the south pacific region. Read the full case study here.

Blog Author

Sahil Sidhwani

Sahil Sidhwani is a Chartered Accountant, accredited by the renowned Institute of Chartered Accountants of India (ICAI), and currently holds the position of Senior SAP-Tax & Revenue Management (TRM) & Public Sector Collections & Disbursements (PSCD) Consultant at invenioLSI. His professional endeavors have led him to provide exceptional services as a Tax Technology Consultant to esteemed tax authorities in the GCC region, namely the General Authority of Zakat and Taxes (GAZT) in the Kingdom of Saudi Arabia (KSA), and his present engagement with The General Taxation Authority (GTA) in the State of Qatar. With an unwavering passion for his field, Sahil's commitment to continuously analyze and interpret taxation laws from diverse countries across the globe has made him a knowledgeable and proficient Tax Consultant. His profound interest in tax matters and his dedication to enhancing his consulting skills have played a pivotal role in assisting tax administrations in their digital tax transformation using cutting-edge SAP TRM & PSCD Technology.

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