No Filing Service (NFS)
Inland Revenue Authority of Singapore

The Problem

Over the years, IRAS has continuously innovated in the design and delivery of our services. In the area of tax filing, we introduced phone filing, followed by e-Filing and the auto-inclusion of income and relief items into the tax returns to bring our taxpayers greater convenience. In 2007, we eliminated the tax return with a bold and radical move, known as the “No-Filing Service (NFS)”.

Before NFS was launched, all individual taxpayers had to submit their tax returns by 15 April each year. Individual taxpayers had to track and keep records of their various sources of income and the personal reliefs that they were eligible for, in order to file an accurate tax return to IRAS. Employers also had to issue hardcopy statements to employees as proof of their employment income. The annual tax filing process was a time-consuming task for many of our taxpayers.

e-Filing of Individual Income Tax returns:

In 1998, we launched the e-Filing of Individual Income Tax returns, enabling our taxpayers to file their tax returns online at their own convenience. With e-Filing, IRAS became the first tax administration in the world to allow the use of internet technology for direct transmission of tax returns by taxpayers to the tax administration without an intermediary. Taxpayers no longer needed to file a physical return. They simply had to logon to MyTax Portal, a secure site on the IRAS website, to complete their filing online at their own convenience. In 2012, a record 97% (or 925,000 taxpayers) e-filed their tax return.

Our e-Filing system was supported by the Auto-Inclusion Scheme (AIS), where we obtain information on our taxpayers’ income and relief at source through regular electronic data matching exercises with the source organisations. For example, employers transmit their employee’s salary data directly to IRAS. IRAS then automatically includes the information received in taxpayers’ returns, relieving taxpayers of the need to fill in such information when they file their returns. The AIS also helps IRAS eliminate the risk of under declaration of income to IRAS.

Introduction of Pre-filled Returns:

In 2006, IRAS enhanced our e-Filing system through pre-filled returns. This enhanced system enabled taxpayers to preview the information that IRAS had directly received under the AIS for verification purposes, and automatically included certain personal tax reliefs based on claims made by the taxpayer in the previous year. With the enhancement, taxpayers need only log into MyTax Portal, to view their pre-filled income and deduction information if their employers participate in the AIS.

Solution and Key Benefits

 What is the initiative about? (the solution)
Committed to our vision of making the annual tax filing season a hassle-free experience for our taxpayers, we simplified the filing process even further in 2007 by launching the No-Filing Service (NFS). This was a bold and radical initiative where employee taxpayers with a straightforward tax position (i.e. their salaries have already been transmitted by their employers to IRAS under the AIS and who typically claim a standard set of personal reliefs) are not required to submit a tax return.

Under the NFS, no tax return is sent to these taxpayers as no filing is required of them. Instead, they receive a notification letter or SMS informing them that they are selected for NFS and need not file a tax return, unless they have additional income to declare or changes to their relief claims. Their tax assessment and bill is then sent directly to them.

In 2007, the NFS began as a pilot project for 45,000 taxpayers. We continually enhanced our processes and systems so that we could extend the scheme to benefit even more taxpayers. By 2012, close to a million taxpayers benefited from the NFS.

NFS reduces the filing burden for taxpayers and makes the tax filing season a non-event for eligible taxpayers. The innovative solution has also significantly reduced the demand for tax filing assistance during the Individual Income Tax peak filing period. Consequently, remaining taxpayers who still need to file their tax returns experience shorter wait-times or queues at various customer touch points. The reduction in number of taxpayers who need to file a return also lightened the load on our e-filing system.

With fewer physical returns to issue and process, IRAS’ operational costs have come down. NFS has also enabled a faster turnaround for issuance of tax bills and the collection of taxes. These savings allowed IRAS to channel valuable human resources to higher value-added tasks.

NFS is an expression of our innovative mindset – a radical departure from the traditional mindset that the tax assessment process starts with the issuance and filing of a tax return. The NFS involved a complete re-engineering of the way we work, and redefined the way we interact with our customers. From a systems perspective, our officers recognised that there was no longer a need to insist on a tax return, because we already captured much of the information needed to raise an assessment at source.

IRAS won the Global Performance Excellence Award (World Class) 2012 and the Assessors complimented IRAS’ commitment to innovate and continuously improve our processes and offerings to serve both the current and future needs of our customers. They acknowledged that this has helped IRAS make changes to our processes like the NFS.

NFS reduced the costs of compliance for eligible taxpayers and has brought satisfaction levels of our customers from being merely satisfied to being delighted.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The senior management team in IRAS saw the potential of bringing taxpayer services to a new level by eliminating the need for tax return with our NFS. This is a radical change in the mental model of providing services to our taxpayers.

While taxpayers cannot escape from paying taxes, IRAS chose to focus on reducing the inconvenience and pain for taxpayers. IRAS believes that excellent service will promote voluntary compliance and adopts an innovative service delivery mindset that ‘no need for service is the best service’.

With that in mind, a cross-functional project team was set up with members from Individual Income Tax Division, Infocomm Division and Law Division to study the feasibility of the NFS.

In 2005, the team began analysing the legislative amendments, system changes and customer selection criteria needed for NFS. Our staff used sophisticated data mining tools to profile our customers, and in 2007, we piloted the NFS to 45,000 taxpayers.

The Taxpayer Services Division was roped in to help taxpayers who may contact IRAS, either by coming down to IRAS or through the helplines. Corporate Communications Branch created awareness of the new initiative through wide-spread media publicity.
IRAS also sought feedback from taxpayers on their receptiveness and concerns for the new service. Feedback was solicited via the Taxpayer Feedback Panel (TFP) which comprises 20 representatives who are members of the local business associations and individuals from various industries.

Three Taxpayer Focus Group (TFG) sessions were also conducted where taxpayers had the opportunity to share their concerns for the new initiative and their inputs were included in the final launch of the NFS. The TFG comprised a cross section of taxpayers from all walks of life.

The project team consulted management on the concerns raised by the TFP and TFG on the accuracy of the information obtained from third party and penalty that may be imposed for not submitting a return. This project team was also tasked to see NFS through to implementation.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The key business objectives behind the initiatives were to bring taxpayer service to a whole new level, reduce taxpayers’ cost of compliance and enhance long-term cost-effectiveness. Strategies formulated to attain them are elaborated below.

To Enhance Taxpayer Services and Reduce Taxpayers’ Cost of Compliance :
The changing technology landscape afforded IRAS the opportunity to develop and deliver service initiatives as new drivers emerged, such as the requirements for:
• One-stop integrated customer self-service via multi-channels, with near 24x7 availability and
• Proactive and zero contact service

IRAS developed MyTax Portal, a self-service portal for individual taxpayers to view their pre-filled tax information, among many other e-services offered at the Portal.

The success of the NFS was very much facilitated by the AIS initiative. The AIS was first introduced in 1998, to allow employers and third parties to directly transmit information on taxpayer's income and deductions to IRAS from source. Before this, employers had to issue hardcopy statements to employees of their remuneration, to enable employees to declare their employment income in the individual tax returns. AIS relieves employers of the need to issue annual statements, while employees can view the pre-filled income and deduction information in their tax returns without the need to separately declare such details in their tax returns.

The base of participating employers participating in the AIS has grown exponentially and will continue to grow. We currently have close to 27,000 employers on AIS, up from 18,670 in 2011. This accounts for 1.2 million employee records or approximately 78% of our taxable employee base. By 2013, 80% of our taxable employee base would be covered under AIS.

By pre-filling returns, the accuracy of submissions has improved as fewer incorrect or incomplete forms were received. This has also reduced our contact with taxpayers, freeing up resources to improve our services in other areas.

Having streamlined the tax filing process significantly, the NFS was a natural progression for IRAS. By eliminating the final step in filing - to e-File the pre-filled tax returns - for eligible taxpayers, we have further enhanced the filing “experience” and reduced taxpayers’ cost of compliance. This initiative also completely eliminated the need to generate physical returns to taxpayer and related costs such as postage and inventory of forms and storage for completed returns.

Enhance Long-Term Cost Effectiveness:
With increased voluntary buy-in from employers to join the AIS, there was great potential to introduce NFS. There were also significant cost reduction opportunities that arose at the prospect of eliminating the need for taxpayers to file tax returns and these were realised in the following ways:

• Pre-filled tax returns reduced assessment errors and processing costs;
• Reduced contacts with targeted taxpayers;
• Reduced load factor on IT systems for processing the returns;
• Enhanced compliance since tax information could be obtained direct from source;
• Faster turnaround in issuance of tax bills as all information was pre-filled and no longer needed manual review;
• Valuable human resources were channelled to more complex and higher-value tasks.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The major milestones in the NFS initiative in chronological order are:
2005 The feasibility study of implementing the NFS framework was conducted
2007 The pilot implementation of the NFS was launched
2007 Launch of MyTax Portal
2008 The full launch of NFS subject to criteria
2009 Modifications and enhancements to the e-Filing system
2011 Introduction of the SMS notification for taxpayers, to alert them not to submit a 2012 return if NFS conditions are met
2012 Expansion of NFS to include new foreign taxpayers

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
Two main challenges faced were the need to change taxpayers’ mindset as well as to ensure minimal tax loss.

Changing Taxpayers’ Mindset:
This initiative was a radical shift from the traditional filing process that had been in existence for many years and prevalent in many countries in the world. It was a challenge to change the mindset of taxpayers that the submission of a return was no longer required for them to obtain their notice of tax assessment.

Although the general consensus among taxpayers, based on sessions with the TFP and TFG, was that the new initiative would be a positive change, there were lingering concerns that IRAS could potentially issue assessments based on wrong information.

Besides allowing taxpayers under the NFS the opportunity to verify their income and reliefs data by putting such information at MyTax Portal, we set up specific helplines and e-mail boxes in the initial years of implementation to cater to enquiries from the target group of taxpayers. IRAS also emphasised the phrase “not required to file” in the NFS letters in response to concerns of penalty for not submitting a return.

Ensuring Minimal Tax Loss:
To minimise potential tax losses, IRAS selected target groups carefully, ensuring that necessary and accurate information was available to calculate tax liabilities for those target groups.

As with any new initiative, publicity and education programmes/efforts were mounted to educate taxpayers to file, only if there were changes to their auto-included employment or relief claims. This was highlighted in the NFS letters. Taxpayer records without any auto-included information were flagged out for manual review. In 2012, we automated the process by linking up with the Central Provident Fund Board to ascertain if taxpayer had any non-auto-included employment income. This allowed for a complete and accurate review of assessments. NFS taxpayers who dropped out of the scheme would be sent a letter to educate them on their tax filing obligations and inform them that they would be required to file a return in the following year.

As highlighted earlier, the AIS is a key enabler of the NFS. Increasing participation among employers in the AIS allowed IRAS to progressively extend the NFS to more taxpayers. To prepare employers who are new to AIS, IRAS conducts trials through the “Auto-Inclusion Submission Simulator” (AISS). This allows employers to become familiar with the process of preparing and submitting their employees' salary details to IRAS before the “live” submission which starts in January of each year. The AISS provides a safe environment for employers new to AIS to practise file preparation and electronic submission, which helps reduce the time taken during the “live” submission. This helps ensure a more effective and efficient reporting process for employers. As IRAS receives about 3.5 million records annually, it is essential to ensure that the data are correctly transmitted to IRAS in the most efficient manner.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
Implementing the NFS only required minor changes to the IT system to exclude the NFS group of taxpayers from receiving their tax returns. Taxpayers who wished to file their returns could continue to use the existing e-Filing system. For the NFS project, 2 personnel were deployed to man the dedicated helplines and email-boxes set up to cater to the enquiries. NFS makes fulfilling tax obligations a non-event for eligible taxpayers. The base of eligible taxpayers benefiting from NFS grows with the expansion of the AIS, as evidenced by the figures presented below:

Year of Assessment No of taxpayers on NFS
2007 45,000
2008 332,000
2009 493,000
2010 653,000
2011 790,000
2012 963,000

As taxpayers need not file, filing contacts have been significantly reduced during the peak tax filing period. The reduction in filing contacts also enhances the user experience for e-Filers since lesser users need to log into the e-Filing system during the peak filing season. NFS has also increased IRAS’ operational efficiency as significantly fewer physical returns and other relevant documents are sent out; the processing of tax returns of eligible taxpayers can also be expedited without any manual intervention. We have received positive feedback from taxpayers with many who are not in the NFS scheme currently requesting to be included in future.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
The NFS is highly sustainable as more employers come under the AIS. The NFS came about because of our innovative culture, use of appropriate technology and continuous review of our processes to provide excellent service to our taxpayers and can be replicated by tax authorities throughout the world.

IRAS has shared with Singapore’s National Healthcare Group (NHG) on the NFS initiative as this showcased our innovative efforts as well as our commitment to service excellence for our taxpayers. We also shared our experience in implementing this initiative at the visits by the Fiji Islands Revenue & Customs Authority (FIRCA) and Vietnam’s General Department of Taxation.
IRAS garnered the 2010 Enterprise Green IT award in Information Technology (IT). The award recognises Singapore-based enterprises with outstanding sustainable Green IT solutions/ practices. Our key e-Services - e-Filing, AIS and NFS - which cut down the usage/storage of paper and saved at least 13 million pieces of paper per annum, contributed to this success.

In 2009 and 2010, the World Bank ranked Singapore as the 5th easiest country in the world to pay taxes. IRAS’ transformation into an efficient and leading tax administration earned the World Bank’s recognition as a model for tax administrations.

The “Auto-Inclusion Submission Simulator” (AISS) project was one of the recipients of the FY 2011 IRAS Commissioner’s Award. This project yielded high-cost savings to IRAS, for an innovative approach that greatly benefitted employers new to the AIS.

The NFS clinched the Bronze medal, beating 12 other local public agencies at the prestigious PS21 ExCEL "“Simple Ideas, Extraordinary Results” Convention 2007 on 1 Nov 2007. This annual Convention recognises the effort of public agencies that have contributed significantly to the improvement in the Civil Service by actively participating in continuous improvement and innovation in their work. In addition, the NFS project team won for their initiative the “Most High Impact Award” at the Ministry of Finance (MOF) Productivity Day 2007. The MOF Productivity Day is an annual event held to recognise and reward agencies within the MOF Family for their active participation in innovation and implementation of outstanding projects/suggestions in their agencies.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
Our vision of being a partner of taxpayers in nation building means that we make a conscious effort to reduce the cost of compliance for our taxpayers with the AIS. Our extensive use of technology to match taxpayer information with third party entities enables us to reduce the time needed by the taxpayer to complete his return. The accuracy of the information we acquire through this matching process also means that taxpayers have faith in our assessment of their tax obligations.

The NFS initiative not only provides a convenient way for taxpayers to fulfil their tax obligation, it also helps IRAS to alleviate the filing load during the Individual Income Tax peak period.

The number of taxpayers who did not have to file has been on the increasing trend, attesting to the success of NFS in making tax filing a non-event for taxpayers. Today, half of Singapore’s individual taxpayer population is eligible for the NFS and do not have to file tax returns at all. With more employers participating in the AIS in the future, more taxpayers will stand to benefit.

The NFS is a reflection of IRAS’ continual commitment in seeking improvements to bring about greater taxpayer satisfaction and convenience to taxpayers. More than 950,000 taxpayers have benefitted from this service.

Based on our post-implementation review, there were some improvements and learning points for the full-scale implementation of NFS.

1) Being a new initiative, there may be many common queries taxpayers may have. The team considered attaching a list of FAQs to the NFS letters. Taxpayers would also be able to share the list of FAQs with friends and families, thus educating the extended group of taxpayers. This assisted in reducing contacts.

2) Given that the majority of NFS taxpayers who contacted IRAS were seeking confirmation that they are not required to file, we understand the importance of reassurances from IRAS to the taxpayers that they would not violate the law by not filing if they satisfy the criteria stated in the NFS letter. Therefore, we have beefed up on our public communication as well as adding a sentence of reassurance in the letter.

Timely and accurate third-party information is a critical success factor in this initiative. We will continue to work closely with employers and other agencies to obtain the necessary information to determine the tax liability for taxpayers accurately. It is with these enhancements that IRAS is able to make quantum improvements in our service delivery to taxpayers, bringing us closer to achieving our vision of being the “leading tax administration in the world”.

Contact Information

Institution Name:   Inland Revenue Authority of Singapore
Institution Type:   Government Agency  
Contact Person:   Claire chua Wen Ying
Title:   Director (CP), Director (Covering) (CC)  
Telephone/ Fax:   6351-2107/ 6351-3050
Institution's / Project's Website:
Address:   55 Newton Road, Revenue House
Postal Code:   307987
City:   Singapore
State/Province:   Singapore
Country:   Singapore

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