Time to speed up Asia Pacific’s digital evolution to support businesses
Opinion 4 minute read

Time to speed up Asia Pacific’s digital evolution to support businesses

4 days ago

National authorities across Asia Pacific are at very different stages in their digital transformation journey – and this has been particularly apparent during the COVID-19 crisis, writes Edmund Lee.

Jurisdictions introduced a myriad of measures in recent months to support businesses. Singapore automatically deferred all corporate income tax (CIT) payments for three months alongside other tax relief. Small, low-profit enterprises in China can defer CIT payments and access reduced VAT rates. Employees working from home in Malaysia can claim tax relief for the purchase of a smartphone, notebook or tablet. Meanwhile Indonesia has earmarked USD $8.3 billion for various tax reliefs and incentives.

TMF Group’s 2020 Global Business Complexity Index (GBCI) highlights the trend of digitisation slowly winning the battle against more paper-based business practices in jurisdictions across the world. However, our research shows that many parts of APAC are behind in their technology journey.

71% of jurisdictions overall allow for official submissions to be made electronically. And while many governments are working to consolidate and streamline electronic reporting, there is still some way to go; 50% of jurisdictions don’t currently require businesses to upload tax invoices to an online portal. This would incur a human factor during a tax audit – and therefore makes it difficult for CFOs to expect a level playing field.

Indonesia – ranked number one on the Index for overall business complexity – is looking to bring all interactions with the authorities under a single submission portal (OSS). However, the portal concept requires licensing bodies, which have yet to be brought into the system and this has resulted in a mixture of electronic and paper-based documentation.

We have seen the country become more flexible in some areas during the crisis. Indonesian tax offices have accepted video calls instead of enforcing the usual face-to-face meetings for VAT registrations and audits.

Malaysia put generous COVID-19 relief measures in place, offering wage subsidies, tax reliefs and extended filing deadlines. Whilst most submissions can be done online, in practice, applications entail a long qualifying process. A skeletal staff at Malaysia’s inland revenue office during the MCO (movement control order) has resulted in longer response and processing times.

The biggest technology challenge for businesses with operations in India and the Philippines is linked to infrastructure. Providing employees with the fast, reliable remote access needed to continue to work from home has been a struggle.

At the other end of the scale, businesses in Hong Kong and Singapore (ranked 12th and 18th simplest in the GBCI respectively) benefitted greatly from having e-filing and other digital systems already in place before the pandemic. Even signatures for official documents in these jurisdictions are accepted electronically, with no fuss.

Singapore and Australia also stand out for their COVID-19 relief measures which include tax deadline extensions and wage subsidies – with no special applications or manual processes required.

Jurisdictions likely to recover fastest are those that can show themselves to be digitally agile, thus reducing human intervention in the oversight process and reducing the overall complexity of doing business.

While further digitisation in APAC seems to be a no-brainer, CFOs will be best placed if they:

  • Closely monitor not just the depth of online submissions in a country, but also the maturity. Plan for teething problems in the early stages of digital transitions, as additional complexities arise with the mix of paper and e-forms;
  • Don’t rest on their laurels after setting their company on an e-submission path in one country. Other countries may follow suit with breath-taking speed, so it’s important to be ready.

Aside from digitisation interfaces with the government and regulatory authorities, CFOs must also take heed of evolving AI (Artificial Intelligence) and RPA (Robotic Process Automation) opportunities for their organisation’s own accounting operations.

Given the rise of digitisation in the form of e-invoicing and electronic submission of records; many manual, routine book keeping tasks such as invoice data entry and reconciling bank statements lend themselves to being automated.

We foresee that within the next 3-5 years there will be significant advancements and proliferation of RPA solutions to automate such entry level tasks within the Finance function, allowing Finance professionals to focus on higher order tasks in the value chain.

Find out how TMF Group’s accounting and tax experts across Asia Pacific can support your business, or make an enquiry with us.

This article was originally published by FutureCFO.

Written by

Edmund Lee

Managing Director, Singapore & Malaysia
Edmund

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