Rwanda Revenue Authority (RRA) has said that tax compliance has improved since the introduction of IDEA data analysis software, which replaced the manual audit system last year.
According to the tax body, the software has lowered the costs of analysis through providing timely accurate audits.
The tax authority said on last week that in the first quarter of 2009, the Customs Services Department registered 38 post clearance audits against the 49 planned— translating into 77.6 percent.
Statistics by the authority also show that 15 of the 38 post clearance audits completed and revenues assessed generated Rwf220.3 million in revenue claims.
“This will…mitigate revenue losses,” Ben Kagarama, the Deputy Commissioner in charge of large tax payers, said of the software in an interview with the Business Times.
According to RRA, about 60 percent of tax revenue comes from audit while voluntary declaration accounts for 40 percent.
“It allows you to quickly import, join, analyse, sample and extract data from almost any source, including reports printed to a file. The new system will help us raise projected revenue and increase the number of taxpayers,” Kagarama explained.
With the new system, according to Kagarama, the tax body has been able to recover forfeited taxes as it easily detects fraud.
“It is not just about broadening the tax base but also making sure that everybody who is supposed to pay tax complies. We are encouraging the business community to use though most of them are reluctant because they have been evading tax.”
In the RRA quarterly report released last week, the tax body announced that of the 160 audit cases planned, 84 audit cases of medium taxpayers were concluded at the final notice of assessment.
Under the large taxpayers, 18 taxpayers were audited comprehensively at final notice against 25 cases planned, accounting for 72 percent.
For 32 issue oriented cases planned by the large taxpayer’s office, 40 percent of the cases were completed at first notice assessment while only 3 percent were concluded at the final notice of assessment.
“Most of the revenue is collected after auditing because most the tax payers under declare. We have also requested large taxpayers to provide certified accounts,” Kagarama explained.
RRA has also set June, 2009, as the certification deadline for all large taxpayer’s financial statements to facilitate the work of auditors.