The Department is committed to generating a steady inflow of public revenue and providing quality services to the taxpaying public. In 2001-02, I am pleased to note that steady progress was made in both areas.
To generate a steady inflow of public revenue is no easy task, especially in the midst of the recent economic slowdown when the level of unemployment and the budget deficit were at their record high. To achieve this objective, concerted efforts have been made by all officers of the Department to ensure that every taxpayer is paying the right amount of tax as prescribed by the law.
To have well thought-out, feasible strategies ready for implementation to hold any economic instability at bay, the Financial Secretary set up the "Advisory Committee on New Broad-based Taxes" in May 2000. Given the primary requirement of maintaining a low rate, simple taxation regime and preserving Hong Kong's competitiveness internationally, the Committee was tasked with the responsibility of considering the suitability of new types of broad-based taxes for introduction in Hong Kong. A Final Report was submitted to the Financial Secretary in February 2002. Its recommendations are still under study.
In April 2001, the Department implemented the "Assess First, Audit Later" (AFAL) system to automate return screening and assessment processes, so as to enable the assessing officers to focus on assessing complex cases and conducting post-assessment audits. On top of the manual system currently in use, a customized computer-assisted case selection program is being devised. Depending on the facts of each case, cases selected will be allotted to the assessing officers to conduct "desk audit", to the field auditors to conduct "field audit" or to the investigating officers to conduct "in-depth investigation". This will, as a result, greatly enhance our effectiveness in identifying high-risk cases for audit and investigation, thereby minimizing the risk of revenue leakage due to tax evasion and avoidance.
Indeed, information technology has an important role to play in modern tax administration. Not only can it enhance our efficiency and effectiveness, it can also serve to increase our transparency and improve the quality of our service to the public.
First launched in May 1996, the IRD website has provided the public with a wide range of tax information. Its content has developed significantly over the years. In 2001-02, the website was revamped. Professional design was introduced to facilitate easy navigation and information searching. The content of the website has also been enriched, with the number of "A4" pages of static information increasing from the initial 500 to 5,000 as at March 2002. The number of annual visitors also increased by 167 times, from 30,000 visits in 1996-97 to 5,030,000 visits in 2001-02.
With a view to stepping up tax education, the Department has issued a number of information pamphlets during the year on common issues of concern, all of which can be downloaded from our website. It is hoped that the revamped website, coupled with other publications, can strengthen the communication between the Department and the public. Effective communication is essential as it serves to enhance general tax knowledge, helps the public to understand their tax obligations and eventually encourages voluntary compliance.
Promoting voluntary compliance is the ultimate objective of every tax administration and means much more than day-to-day enforcement measures. The Department is aware that apart from helping the taxpayers understand their tax obligations, we have to make compliance an easy job for them. To this end, we have strived to simplify our procedures and have introduced various electronic services on tax payment, return lodgement and tax enquiry. After months of development, the E-Forms for Profits Tax Returns and the TeleTax were launched in April 2002. Taxpayers can now file their Profits Tax Returns through E-mails on the Internet. Those who cannot access the Internet can make use of a "Taxpayer Identification Number" (TIN) and a password to make enquiries on their personal tax affairs anytime through a touch-tone phone. The Department is planning to extend the telephone services to telefiling of tax returns.
The Amendment Bill for the proposal is under consideration
As civil servants, we take pride in serving the community and performing our official duties. It is most encouraging that our efforts have been recognized. The Department has achieved or even exceeded the targets in most of our pledges in 2001-02 and was awarded an Honourable Mention by the Efficiency Unit, the Government of the HKSAR. In addition, three of our staff have won individual awards from the Ombudsman.
Looking ahead, we are faced with an uncertain economy and a budget deficit. 2002-03 will certainly be another year of challenge. However, with our staff all "Marching shoulder to shoulder, braving the challenges together" (the new slogan for 2002-03), alongside with the application of information technology and well-thought-out business re-engineering plans, I am confident that we can rise to the challenge and provide the public with even better services.
Finally, I would like to thank all staff for the commitment and dedication they have shown in performing their duties and serving the public during the year. In addition, I should express my deepest gratitude to members of other departments for their unfailing support and assistance.
LAU MAK Yee-ming, Alice, J.P.
Commissioner of Inland Revenue
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(Last updated/reviewed : January 13, 2003)