Electronic Tax Filing (e-Tax)

  • - Ongoing

    Estonia

Since 2002, Estonian citizens can file their taxes using automated tax declaration forms with the Republic of Estonia Tax and Customs Board. This system has continously matured over the years to become more once-only: Since 2015, taxpayers can use the one-click tax returns where the data already known and gathered from different registries is displayed to the citizen automatically without having to re-enter data manually. 

How does it work? 

Using a secure ID, a taxpayer logs onto the system and can review their data in pre-filled forms.They can make any necessary changes, and approve the document with a digital signature. Since 2015, one-click tax returns are also available: All known data is displayed to the citizen together with the calculated result, then all they have to do is click on the confirmation button. The process typically takes three to five minutes. Therefore, citizens do not have re-enter data manually.

The secure data exchange layer X-Road is used for gathering data from different registers. In this case of e-Tax for example, data from the population register by the Ministry of the Interior and the commercial register by the Ministry of Finance is collected. X-Road is a technological and organizational environment enabling a secure Internet-based data exchange between information systems. All registers in Estonia have to be a member of X-Road and can be linked by commonly accepted keys such as the personal code for citizens, the code of institution and the standardised address. 

In addition to individual tax returns, other declarations can be made in the system as well, such as value-added tax returns and customs declarations. 

What are the benefits and challenges? 

Since its introduction, it has drastically reduced the time spent by individuals and businesses on filing taxes. Citizens spend an average 7 minutes for submitting online declaration. Each year, around 95 percent of tax declarations in Estonia are filed electronically and taxpayers receive refunds within five days. Another added benefit to the e-Tax that declaration errors have been reduced as higher data quality can be insured through automated data input. 

The system also had to face some challenges. Some paper based requirements were necessary due to legal interoperability and the Estonian government named high development costs as a barrier for implementation. 

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