ABSTRACT
Solopreneurs play a major role in building the economy not only due to their number but also to their geographic locations. However, e-government which includes electronic tax compliances brought by rapid technological change has evidently increased digital division and socio-economic stratification between the high-income and low-income earners bracket of the economy, moreover, between urban and rural areas. Constraints are more evidently visible in the lower bracket of the economy, so much more in the rural areas where technology was not fully adopted. To gain further insights to the problem, the study using a descriptive-correlational research design through a survey questionnaire was conducted among solopreneurs in three rural areas under different BIR revenue district offices to describe the condition of the solopreneurs in rural areas, their level of awareness, including the challenges, risks and vulnerabilities associated with the BIR electronic filing and payment systems, and to establish and analyze the possible relationship subsisting between the electronic filing and payment systems of the BIR and the rural solopreneurs’ compliance. The findings revealed that the rural solopreneurs were generally aware of the BIR electronic filing and payment systems in terms of implementing rules and regulations, costs and benefits, technical knowledge and skills, and data privacy and security. The results also showed that perceived usefulness and ease of use had a significant impact on the rural solopreneurs’ compliance subject to limitations on the level of awareness of the system and the learning curve of the user. Aside from recommendations on continuous taxpayer’s education and improve information dissemination, the study calls for the need to focus on the measurement of tax gaps in rural areas' tax compliance and how this can be alleviated.
Keywords: eBIR, eFPS, eBIRForms, electronic filing platforms, eGov, Tax compliance
Introduction
Over the past several years, developing countries from around the globe have adopted the electronic filing and payment system to modernize and efficiently facilitate their tax administration. It was widely assumed that through the use of modern technology and facilities through deployment of e-government in support of good governance is essential for building efficient and effective institutions at all levels. In the 2018 survey facilitated by the United Nation, it highlighted the persistent positive global trend towards higher levels of e-government development. According to the survey, there has been steady progress in improving e-government and public services provision online globally. But despite some development gains and major investments made in several countries, the e-government and digital divides persist. Rapid technological change has increased the digital division and socio-economic stratification between the high-income and low-income earners bracket of the economy, moreover, between urban and rural areas.
In 2020, the importance of online and electronic systems has proven its usefulness not only in business but all sorts and aspects of life. In the fields of education, medical services, banking, government services, and even basic necessities such as groceries were made available online. Incidents like the Taal volcano eruption, and the most recent pandemic which paralyzed the world economy, the COVID-19, basically divided various sectors of the community and prevented them to physically interact with each other. The latter has made the online and computerization of things as the “new normal” way of doing everything.
The “new normal” has confined the options to the internet of things, NEDA in agreement with Pippin and Tosun (2014), and OECD (2017). Though their conclusions are acceptable, applicability to all is on the opposite as Kumar and Kumar (2018) concluded that people's acceptance of E-filing is highly related to their level of technology readiness, both taxpayers and the government. De Castro, et. Al (2015) reiterated that poor cyberinfrastructure can further be seen coming into play as a major weakness in the e-tax system. United Nations’ E-Government Survey 2018, noted that online use offers an opportunity for e-inclusion but also risks a new digital divide.
Based on the study sponsored by the World Bank (Coolidge and Yilmaz, 2014), and De Castro et. al (2015), the use of e-filing of tax returns has spread from developed to developing countries. The international tax community has been encouraging the introduction of e-filing as part of technical assistance programs to modernize and strengthen tax administrations. The awareness and knowledge of the process and benefits, compliance costs, and poor cyber security, undermine the level of compliance. The theory on technology acceptance, TAM and UTAUT, explained the relevance and effect of the perceived usefulness and perceived ease of use by an individual of a certain technology affecting the intention and action to adopt such technology.
Globally, there were a number of researches made in relation to the electronic filing system of the government, not only limited to tax filing but also include other services such as social security, health maintenance, and other government agencies utilizing online portals in providing services to its constituents. Most of the study concentrated on the areas where the specific government programs and campaigns were initially introduced and tested, more specifically, the central business district of the country or the geographic regions selected. Areas outside the business district of each country or geographic region were oftentimes not included as subject for evaluation of the effectiveness of the government programs especially those that involve technology. Geographically, rural areas are also subject to the same laws, regulations, and government required from those businesses in the urban, though the level of literacy promotion and information campaign is not as extensive in rural areas as compared to that of the urban.
The studies made share a common virtue on the importance of literacy and awareness on electronic filing and payment systems of the government and the urgent need to draw a line and address the gap between the increasing level of the digital divide in the society, particularly in businesses sectors of the economy.
Through the integration of information and communication technology, the Philippines, has started modernizing its facilities to face the challenge of sustaining and even furthering its currently fast-growing economy which has been laid down in the E-Government Master Plan (EGMP). Specifically, to provide taxpayers a more convenient way of filing and payment of taxes, the Bureau of Internal Revenue (BIR) has introduced electronic filing and payment systems, the electronic filing and payment system (eFPS) in 2001, and electronic BIR forms (eBIRForms) in 2013. With the implementation of various BIR rulings and memoranda, the mandatory tax filing for businesses can only be made through the electronic filing and payment systems. The taxpayers, regardless of size, from micro businesses to multinational companies, are covered by the same rules and regulations, revenue memorandum circulars, revenue memorandum orders, and revenue administrative orders, which includes administrative penalties, surcharges, and interest.
The most important challenges for the development of e-taxing were highlighted by Patnaik et. al (2019) and De Castro, et. al (2015). In response and in line with the E-Government Master Plan, various acts including Republic Act 10844, 8792, and 10173 have laid down measures to establish trust, security and privacy include cybersecurity measures to strengthen the reliance of public and promotion of using the ICTs and assists in the promotion of the ICT programs and its implementation.
The dissemination of information and how to further give assurance to the taxpayers largely depend on the government, both national and local levels. Ayesha and Mynavathi (2018) study revealed that most of the individual taxpayers are not aware of the e-filing and e-payment procedures. This presupposed Odongo (2016), and Hassan et. Al (2016), which noted that taxpayer education should be delivered more attractively, in a way that the young generation will also take part. The new generation will assume the business or the more, has already started their business ventures, making them one of the subject beneficiaries of tax information.
The perceived benefits will also play a major role in promoting tax education. Coolidge and Yilmaz (2014), Saravanan and Lakshmi (2017), and Patnaik et al (2019) highlighted the benefits of the usage of electronic systems to the tax revenue authorities and taxpayers as compared to that of traditional systems. Though benefits can be visibly seen, this will depend still on the user’s learning curve.
A growing number of researches has explored electronic tax compliance. However, no previous study has focused solely on the rural areas' taxpayer compliance. Most of the studies conducted with regards to electronic tax compliance were concentrated in the pilot areas or business districts and limited attention has been given to the taxpayers situated in remote areas whom the technology or digital division is visible which may affect the level of compliance.
Although maximum effort had been made to select different solopreneurs from different RDOs and towns with different nature of business, the study was on the awareness of electronic filing and payment systems, the acts non-compliance, whether intentional or unintentional, may constitute partial or complete tax avoidance. The problem of tax avoidance which was too complex to be covered by this study was not discussed.
Furthermore, this study focused on the filing compliance of taxes imposed by the BIR on businesses. Other taxes on businesses such as those imposed by the local government will likewise not be included.
The present study will assess the level of awareness of rural solopreneurs, including the challenges, risks and vulnerabilities associated with the BIR electronic filing and payment systems, and establish and analyze the possible relationship subsisting between the electronic filing and payment systems of the BIR and the rural solopreneurs’ compliance. This assessment is vital due to the turn of events that requires the government to immediately improve the e-government system and facilities avoiding the fatal blows of the economic turbulence caused by the pandemic. The study hopes to provide a clear picture of the condition of the solopreneurs in rural areas, their level of awareness, including the challenges, risks and vulnerabilities associated with the BIR electronic filing and payment systems.
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