Peter HorsburghPeter Horsburgh

World Wide Taxation Industry ManagerWorld Wide Taxation Industry Manager

Microsoft CorporationMicrosoft Corporation

peterhor@microsoft.competerhor@microsoft.com

425-703-7491425-703-7491

International tax applications International tax applications of XMLof XML

AgendaAgenda

International tax sceneInternational tax scene Problem spaceProblem space International applications of XMLInternational applications of XML Uses of XML:-Uses of XML:-

WrapperWrapperData dictionaryData dictionary

What is e-GovernmentWhat is e-Government Futures for US – Taxml / XBRL / X12 etc?Futures for US – Taxml / XBRL / X12 etc?

Problem space. Consider the Problem space. Consider the following:following: Singapore Inland RevenueSingapore Inland Revenue IT EnvironmentIT Environment

Key Technology PlatformsKey Technology Platforms IBM mainframes, HP-UX, Compaq NT, IBM mainframes, HP-UX, Compaq NT,

Sun(small)Sun(small)

Core apps/vendorsCore apps/vendors SAP on HP UX-Financial module only; SAP on HP UX-Financial module only;

looking into HR nowlooking into HR now

Key Database platformsKey Database platforms DB2, Oracle-Unix, Informix, SQLDB2, Oracle-Unix, Informix, SQL

Key Network PartnersKey Network Partners CISCO, 3Com, IBMCISCO, 3Com, IBM

Singapore IR Singapore IR (cont.)(cont.)

IBM S/390IBM S/390 1 with back up1 with back up IRISIRIS

6 big HP-UX UNIX 6 big HP-UX UNIX WorkflowWorkflow 100+ Silicon Graphics workstations100+ Silicon Graphics workstations

Novell Novell Network OS – Network OS – 13 Servers13 Servers

Lotus Notes Lotus Notes 7 NT Servers7 NT Servers

Singapore IR Singapore IR (cont.)(cont.)

Issues:-Issues:-

Although as single solutions the list above has provided Although as single solutions the list above has provided Singapore with effective results, the impacts include:Singapore with effective results, the impacts include:

Difficult connectivity scenario’sDifficult connectivity scenario’s Workflow inefficienciesWorkflow inefficiencies Very costly maintenanceVery costly maintenance C2G; B2G and G2G transactions require a lot of effort C2G; B2G and G2G transactions require a lot of effort

– and this is Singapore, a country noted for its IT savvy– and this is Singapore, a country noted for its IT savvy

Quick word on global tax Quick word on global tax modernizationmodernization

Tax agencies lead other government agencies in Tax agencies lead other government agencies in renewal and updating of systems, that said, most rely on renewal and updating of systems, that said, most rely on systems deployed many years agosystems deployed many years ago

Pressures of the ‘new economy’ which implies risk to Pressures of the ‘new economy’ which implies risk to the tax base – greater number of taxable transactions the tax base – greater number of taxable transactions per taxpayer type especially capital gains relatedper taxpayer type especially capital gains related

All taxpayer types are demanding greater access to:All taxpayer types are demanding greater access to:Current & prior year tax informationCurrent & prior year tax informationProblem resolutionProblem resolutionAdvanced rulings / interpretation of legislationAdvanced rulings / interpretation of legislation

Quick word on global tax Quick word on global tax modernization modernization (cont.)(cont.)

Internal consumers of tax data are demanding Internal consumers of tax data are demanding greater ease of access to data (digital greater ease of access to data (digital dashboards)dashboards)

All ‘systems’, in an effective workflow All ‘systems’, in an effective workflow environment must be able to connect and environment must be able to connect and operate to meet the demand of the consumers operate to meet the demand of the consumers of tax information – which means logical, of tax information – which means logical, consistent and reusable data objectsconsistent and reusable data objects

Latest business models for tax agencies reflect Latest business models for tax agencies reflect the ‘Internet Age’, openness of Government, the ‘Internet Age’, openness of Government, and greater levels of taxpayer servicesand greater levels of taxpayer services

XML’s roleXML’s role

What is the role of XML in the tax administration What is the role of XML in the tax administration environment?environment?

How can it help with:-How can it help with:-ConnectivityConnectivityOperabilityOperabilityWorkflowWorkflowEfficienciesEfficienciesExtended services to the consumers of tax Extended services to the consumers of tax

information?information?

International examples of XMLInternational examples of XML

UK Inland RevenueUK Inland Revenue Australian Tax OfficeAustralian Tax Office Canada Customs and Revenue Agency (CCRA)Canada Customs and Revenue Agency (CCRA)

Inland RevenueInland Revenue

Modernization (Phase 1) initiatives include:Modernization (Phase 1) initiatives include:Citizen to Government (C2G)Citizen to Government (C2G)

EF tax returns EF tax returns Access anywhere, anytime (24x7x365)Access anywhere, anytime (24x7x365)

Business to Government (B2G)Business to Government (B2G)PAYE (W2) EF filing & payment via webPAYE (W2) EF filing & payment via webVAT filing & payment via webVAT filing & payment via web

Government to Government (G2G)Government to Government (G2G)Data sharingData sharing

Inland Revenue Inland Revenue (cont.)(cont.)

Technology – consumer filing Technology – consumer filing

Major turn key solution, deployed overtime which Major turn key solution, deployed overtime which includes:-includes:-Direct internet filing using http post and 128 bit Direct internet filing using http post and 128 bit

encryption, initially for individual tax returns, encryption, initially for individual tax returns, overtime all tax return types:- corps, p/ships, trustsovertime all tax return types:- corps, p/ships, trusts

Digital signature legislation for paperless systemDigital signature legislation for paperless systemInitially PIN (PKI) Initially PIN (PKI) goal Smartcards goal Smartcards

Accessibility, file anywhere, anytime goalAccessibility, file anywhere, anytime goalStandard for data management – XML schemaStandard for data management – XML schema

Inland Revenue Inland Revenue (cont.)(cont.)

Technology (Phase 2) – long term goals.Technology (Phase 2) – long term goals. Back end goals include:-.Back end goals include:-.

Real time processing.Real time processing.Accessibility to data (XML schema -- conduit) for Accessibility to data (XML schema -- conduit) for

risk management, profiling, black box, taxpayer risk management, profiling, black box, taxpayer enquiries etc.enquiries etc.

C2G, B2G enhancements such as all communications C2G, B2G enhancements such as all communications electronic, secure messaging etc.electronic, secure messaging etc.Connectivity goals for sharing data between IR & Connectivity goals for sharing data between IR &

other government departments:-.other government departments:-.HMS exercise & customs (VAT).HMS exercise & customs (VAT).Dept of social security (DSS).Dept of social security (DSS).Companies house……..Companies house……..

Why did IR UK adopt XML?Why did IR UK adopt XML?

XML schema efficiencies over existing EDI schema:-XML schema efficiencies over existing EDI schema:-Cost!Cost!

Development & maintenanceDevelopment & maintenanceEfficient – data sharing / Reusable objects Efficient – data sharing / Reusable objects

Manage only raw dataManage only raw dataCoding efficiencies Coding efficiencies View anywhere, anytime, in any formatView anywhere, anytime, in any format

Why did IR UK adopt XML? Why did IR UK adopt XML? (cont.)(cont.)

Reduces dependencies on accepting only current Reduces dependencies on accepting only current year processing data (why stop defaulters filing past year processing data (why stop defaulters filing past year returns)year returns)

XML low maintenance costXML low maintenance costMaintenance to back-end processing can be Maintenance to back-end processing can be

mutually exclusive to front-end mutually exclusive to front-end Schema can be customerised by other agencies, Schema can be customerised by other agencies,

businessbusinessXSL ~ HTML the customer friendly face!XSL ~ HTML the customer friendly face!

UK GovernmentUK Government Major modernization strategy led by Prime Minister, Tony Blair – Major modernization strategy led by Prime Minister, Tony Blair –

Government White paper goal states 100% electronic Government White paper goal states 100% electronic communications by 2005communications by 2005

First examples:- First examples:- MAFF - applications by farmers for EU subsidiesMAFF - applications by farmers for EU subsidies DSS - pension claims by citizens about to retireDSS - pension claims by citizens about to retire HMCE - VAT returns, and export statistics by businessesHMCE - VAT returns, and export statistics by businesses

Accessibly objective:- Accessibly objective:- C2GC2G B2GB2G G2GG2G

Smarter, efficient & productive governmentSmarter, efficient & productive government Cabinet plans shortly to announce the first set of XML Schema’s, Cabinet plans shortly to announce the first set of XML Schema’s,

XML toolkits and best practice adopting ‘UK GovTalk’XML toolkits and best practice adopting ‘UK GovTalk’

Australian Taxation Office (ATO)Australian Taxation Office (ATO)

Over 75% of all correspondence by individual Over 75% of all correspondence by individual taxpayers completed electronically (via tax agent taxpayers completed electronically (via tax agent community and direct filing services). Response community and direct filing services). Response typically exceed the taxpayer charter commitment of typically exceed the taxpayer charter commitment of 14 days14 days

All tax returns:- Individual, corporations, partnerships, All tax returns:- Individual, corporations, partnerships, trusts, & pension funds can be filed electronically, trusts, & pension funds can be filed electronically, with bill pay / presentment / refunds processing options with bill pay / presentment / refunds processing options availableavailable

ATO ATO (cont.)(cont.)

Major taxation reform in Australia that included the Major taxation reform in Australia that included the introduction of a Goods & Services Tax 1 July 2000. introduction of a Goods & Services Tax 1 July 2000. Reform includes all tax events (Income, Sales, Fringe Reform includes all tax events (Income, Sales, Fringe Benefits, Provisional….tax etc)Benefits, Provisional….tax etc)

Business Activity Statements (BAS) for GST first Business Activity Statements (BAS) for GST first major XML application – foundation for all business major XML application – foundation for all business types forms to file in the future using XMLtypes forms to file in the future using XMLBAS electronically filed using 128 bit / httpsBAS electronically filed using 128 bit / httpsCan be completed on or off lineCan be completed on or off line

XML selected for same reasons as UK IRXML selected for same reasons as UK IR

ATO XML selection reasons:ATO XML selection reasons:

Cost!Cost!Development Development Efficient – data sharing / Reusable objects – BAS Efficient – data sharing / Reusable objects – BAS

data shared between a number of tax departments, data shared between a number of tax departments, states & other federal government departments.states & other federal government departments.

Manage only raw dataManage only raw data Coding efficiencies Coding efficiencies View anywhere, anytime, in any formatView anywhere, anytime, in any format XML low maintenance costXML low maintenance cost

New tax regime will require ‘adjustments’New tax regime will require ‘adjustments’ XSL ~ HTML the customer friendly face!XSL ~ HTML the customer friendly face!

ATO ATO (cont.)(cont.)

XML can be used in multiple scenario’s – ATO AssistXML can be used in multiple scenario’s – ATO Assist http://www.ato.gov.auhttp://www.ato.gov.au

ATO Web services are using XML in three main ways:ATO Web services are using XML in three main ways:

navigation hierarchies (sitemaps) are stored in static XML navigation hierarchies (sitemaps) are stored in static XML files. This is used to dynamically build the navigation files. This is used to dynamically build the navigation pages of the site (by transforming using XSLT) and pages of the site (by transforming using XSLT) and linking into the publishing tools to allow users to publish linking into the publishing tools to allow users to publish content to particular parts of the site. Storing the sitemap content to particular parts of the site. Storing the sitemap in a single XML file means that one change is instantly in a single XML file means that one change is instantly reflected in all parts of the site and tools.reflected in all parts of the site and tools.

COM components generate results internally as XML. The COM components generate results internally as XML. The methods which are called from ASP pages all pass in an XSL methods which are called from ASP pages all pass in an XSL stylesheet which is used to render the output in different ways on stylesheet which is used to render the output in different ways on different parts of the sites. For example, the content renderer different parts of the sites. For example, the content renderer generates the Tables of Contents as XML, and the DocList and generates the Tables of Contents as XML, and the DocList and Search objects produce lists of documents as XML. The XSLT Search objects produce lists of documents as XML. The XSLT provides a UI customisation layer - so that is possible to provides a UI customisation layer - so that is possible to completely change the output of an existing component just by completely change the output of an existing component just by building new XSL - leaving the COM and ASP the same.building new XSL - leaving the COM and ASP the same.

Small amounts of structured data (i.e.. News headlines, important Small amounts of structured data (i.e.. News headlines, important dates) are stored internally in an SQL Server and the useful data dates) are stored internally in an SQL Server and the useful data for display on the site is written to XML. These can be deployed for display on the site is written to XML. These can be deployed to live servers over FTP/HTTP and result in quicker performance to live servers over FTP/HTTP and result in quicker performance and eliminates SQL synchronisation over firewallsand eliminates SQL synchronisation over firewalls

ATO - summaryATO - summary

Still have a number of modernization initiatives to further Still have a number of modernization initiatives to further enable their business.enable their business.Mass role-out to the community of digital signatures.Mass role-out to the community of digital signatures.Secure messaging.Secure messaging.Group reconciliation (W2 equivalent) electronic filing.Group reconciliation (W2 equivalent) electronic filing.Efficiency gains via real time processing.Efficiency gains via real time processing.Interconnectivity & interoperability of existing legacy Interconnectivity & interoperability of existing legacy

systems with new technologysystems with new technologyNumerous GST initiatives – including new cross Numerous GST initiatives – including new cross

matching systems to check reported business tax gross matching systems to check reported business tax gross sales against GST filings.sales against GST filings.

All potential XML applications!All potential XML applications!

Canada Customs and Revenue Canada Customs and Revenue Agency (CCRA)Agency (CCRA)

NETFILE – CCRA goal to offer NETFILE – CCRA goal to offer Canadian taxpayers Canadian taxpayers convenient tax-filing optionsconvenient tax-filing options Direct filing over the internet, implemented using Direct filing over the internet, implemented using

XML wrapper around existing EDI schemaXML wrapper around existing EDI schemaTaxpayer prepares return using commercially Taxpayer prepares return using commercially

available tax preparation software, software available tax preparation software, software validates return, then prepares EF outputvalidates return, then prepares EF output

Taxpayer goes to CCRA web page, and submits Taxpayer goes to CCRA web page, and submits file, which is encrypted using the browser 128 bit file, which is encrypted using the browser 128 bit encryptencrypt

CCRA – NETFILE CCRA – NETFILE (cont)(cont)

Once tax return is filed using the post & encrypt Once tax return is filed using the post & encrypt mechanism, the receiving server sends a receipt mechanism, the receiving server sends a receipt (confirmation number) and accept / reject validation (confirmation number) and accept / reject validation reportreport

Initially, existing data schema (EDI based) used for Initially, existing data schema (EDI based) used for NETFILE, speed to web enabled by wrapping the EDI NETFILE, speed to web enabled by wrapping the EDI schema in an XML wrapper to allow http post. schema in an XML wrapper to allow http post. Ultimately a new data schema for the same benefits for Ultimately a new data schema for the same benefits for Gov as described for UKGov as described for UK

Goal for NETFILE same as UK – accessibility to gov Goal for NETFILE same as UK – accessibility to gov for its citizensfor its citizens

CCRA - summaryCCRA - summary

Revenue Canada & customs under one organization Revenue Canada & customs under one organization long term goals include:-long term goals include:-Electronic submission & ecommerce for small Electronic submission & ecommerce for small

business – reduce burden & cost of compliance business – reduce burden & cost of compliance (W2 equivalents, benefits, indirect tax issues, (W2 equivalents, benefits, indirect tax issues, payments etc)payments etc)

Timely response on dispute / query items, Timely response on dispute / query items, acknowledging closureacknowledging closure

All correspondence to gov capable of electronic All correspondence to gov capable of electronic transaction, supported by secure mail, automated transaction, supported by secure mail, automated phone systems, and increased accessibilityphone systems, and increased accessibility

Maintaining & extending existing relationshipsMaintaining & extending existing relationships

XML applicationsXML applications

As a:-As a:-WrapperWrapperTaxonomyTaxonomyXSL for viewing dataXSL for viewing data

What is e-GovernmentWhat is e-Government

Why is important ?Why is important ?

Details…. Details….

How can it lookHow can it look

Reinventing the GovernmentReinventing the Government

““Governments all over the world are reforming and Governments all over the world are reforming and reinventing themselves so that they are smaller, reinventing themselves so that they are smaller, smarter and more responsive to change in this fast-smarter and more responsive to change in this fast-changing information age”changing information age”

USA Vice President Al Gore

Excerpt from transcripts of 21st Century Government Reinvention

Jan 1999

Reinventing the GovernmentReinventing the GovernmentBasic ChallengesBasic Challenges

Size and place does matterSize and place does matterThe Smaller the BetterThe Smaller the BetterLocal vs Centralized oneLocal vs Centralized one

EffectivenessEffectivenessThe best ROI for tax payers, improve quality of The best ROI for tax payers, improve quality of

serviceservice Searching for a new relationshipSearching for a new relationship

Trust failure and new customer focusTrust failure and new customer focus From Industrial to Information AgeFrom Industrial to Information Age

Never ending process of change, on World-Wide Never ending process of change, on World-Wide scalescale

Building the technology infrastructureBuilding the technology infrastructure

Excerpt from transcripts of 21st Century Government Reinvention, Jan 1999

Reinventing the GovernmentReinventing the GovernmentStrategies and TacticsStrategies and Tactics

Search for a smaller Government through efficiency Search for a smaller Government through efficiency gains rather than cutting programsgains rather than cutting programs

Development of new processes like reingeneering of Development of new processes like reingeneering of service systems, contracting out, performance service systems, contracting out, performance management and accrual accountingmanagement and accrual accounting

A new focus on transparency of Government A new focus on transparency of Government operationsoperations

A strong emphasys on Customer ServiceA strong emphasys on Customer Service Leveraging the Information TechnologyLeveraging the Information Technology

Excerpt from transcripts of 21st Century Government Reinvention

Electronic Government Electronic Government (Microsoft’s GovTalk)(Microsoft’s GovTalk)

““When software speaks the language of Government”When software speaks the language of Government”

An open process, involving customers and industry An open process, involving customers and industry partners, which facilitates the adoption of electronic partners, which facilitates the adoption of electronic government servicesgovernment services

A framework of standardized specifications - leveraging A framework of standardized specifications - leveraging XML technologies - to enable integrated service delivery XML technologies - to enable integrated service delivery anytime, anywhere, on any deviceanytime, anywhere, on any device

Participate in the Electronic Government Forum Participate in the Electronic Government Forum community and apply to specific scenarios, to design community and apply to specific scenarios, to design interoperable, reusable, and sharable servicesinteroperable, reusable, and sharable services

Government PortalGovernment Portal““Architecture for integrated electronic governmentArchitecture for integrated electronic government””

Secure technology platform to Secure technology platform to catalyze ecommercecatalyze ecommerce, ,

integrate applications andintegrate applications and support on-line personalized support on-line personalized communication with and within governmentcommunication with and within government

Access point to integrated government services from Access point to integrated government services from any device, any where, any timeany device, any where, any time

Leverage portal momentum to Leverage portal momentum to educate, empower, and educate, empower, and employemploy

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COMMON APPLICATIONS

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Drivers License, Vehicle Regis-tration

Excise Taxes

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Standard Data Representation & ExchangeStandard Data Representation & ExchangeD

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Interagency Policy & Security ManagementInteragency Policy & Security Management

Interagency & External Notary ServiceInteragency & External Notary Service

Directory Services (Organizations, Agreements, Services)Directory Services (Organizations, Agreements, Services)

Services’ Standardized InterfacesServices’ Standardized Interfaces

Legacy Integration WrappersLegacy Integration Wrappers

Microsoft Government PortalMicrosoft Government PortalFunctional architectureFunctional architecture

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Futures – XML schema’s for US?Futures – XML schema’s for US?

TaXMLTaXMLGoalsGoals

Design a new schema that encompasses all tax Design a new schema that encompasses all tax transactionstransactions

Communicate data independent of platformCommunicate data independent of platformReorganize tax data to eliminate duplicationReorganize tax data to eliminate duplicationConsider only data elements (not data contained Consider only data elements (not data contained

on forms) to reduce storage, increase efficiency on forms) to reduce storage, increase efficiency and save development costsand save development costs

XBRL – see XBRL – see www.xbrl.orgwww.xbrl.orgANSI / X12ANSI / X12

Questions?Questions?