By Fanruan Data Application Research Institute

Tax is the major source of state revenue, and plays an important role in state building and people’s living. How does Huzhou Municipal Office, SAT improve its tax service in an effective way to benefit the state and the people as a tax authority? This paper will show you Huzhou Municipal Office, SAT and the way of tax data mining and application in this new stage during this new period of time.

Overview of Huzhou Municipal Office, SAT

Huzhou is a prefecture-level city in northern Zhejiang province, and borders Jiaxing to the east and Hangzhou to the south. It is one of the 14 major cities implementing “planning first, development first” in the Yangtze River delta leading by development and opening-up of Pudong District of Shanghai, also a member of “Yangtze River Delta Economic Zone” and one of Top 100 prefecture-level cities with the highest GDP of 2016 in China. Huzhou Municipal Office, SAT (hereinafter referred to as “the Office”) is responsible for managing collection of taxes in local areas via the national tax system.

Bottleneck of tax informatization

The Office hit a bottleneck in the early stage of tax data application and mining, just as most enterprises and government entities that begin to explore big data application, with following characteristics:

1. Various data sources: general data of a tax authority includes invoice data, collection management data, etc. These data alone cannot establish effective administration of tax paying of enterprises. The Office makes an active attempt to introduce electric power data and other third-party data during tax informatization to enable overall administration of tax paying. However, this also results in various data sources, and without effective tools, it is not possible to achieve efficient application of data.

2. Poor data quality: the government lags behind in information construction. Data in the original system vary in quality, which also leads to more difficulties in data acquisition during tax informatization.

3. Weak development capability: since the national tax system is a business-oriented institution, there is no need to enhance its value through IT capability. Therefore, when it is intended to improve management efficiency through information technology, current development capability appears to be a little weaker with low development efficiency and poor user experience. But introduction of external manufacturers is likely to make it trapped troubles, thus its development restricted by such case.

Idea of data application

Confronted with the bottleneck during tax information construction, the Office makes a complete examination and investigation of internal demand and market conditions, rather than rushing to use big data application platform and other relevant platforms, so as to define an overall idea of tax information construction as below:

1. Transform the software-based thinking model to data-based model. Standardize the collection of scattered business data and data storage, and timely and properly present the results in diagrams to connect internal data and lay a foundation for business demand.

2. Set key objectives of facilitating data application based on demand and improving business value and efficiency. Establish supporting services for data analysis platform based on small data around basic requirements to rapidly enhance business value and efficiency with small investment in a short term.

The simple, professional and flexible platform known as FineReport reporting tool coincides with the idea of information construction of the Office, and has played a key role in helping to rapidly establish a data based taxation management platform for the Office to effectively accelerate application of tax-related big data.

Data based taxation management platform

The data based taxation management platform supported by FineReport reporting tool is committed to assisting the Office in collecting local tax information in time and presenting the information in visual diagrams. With the help of the “digital board” provided by the platform, tax collection managers of the Office can timely know the current management condition of tax collection, receive early warning for abnormalities occurring to tax collection and follow up and handle such abnormal conditions, thus greatly enhancing execution efficiency.

How does the platform assist the Office? Four modules are mainly included:
1、 Tax statistics
Nearly 150,000 enterprises pay tax through the national tax system in Huzhou. Without effective data management to screen key tax payers and see which services are necessary during tax collection, it will be extremely difficult for the Office to collect tax from and manage tax for so many tax payers. Before applying the visual diagrams, the Office used the traditional digital report for daily tax statistics. Such statistics cannot directly present hidden information contained in the data, thus failing to give play to strength of data. The “Tax Condition Interface” in the platform is an effective solution to this problem.

“It is unexpected that those taxpayers who account for less than 2% of the entire group pay over 80% of taxes.” said a leader of the Office after application of the “Tax Condition Interface”. As a result, the Office easily targets no more than 3000 key taxpayers to provide taxation services.

In addition to pooled analysis on taxpayers with different sizes, the “Tax Condition Interface” can also clearly summarize and show information related to tax paying based on different classifications of taxpayers and different collection agents, where the total amount and proportion, paid by such different taxpayers as fixedly registered ones, temporarily registered ones, non-resident enterprises and withholding and remitting oriented parties in each branch office at county or district level, can be easily understood.

2、 Follow-up of key taxpayers
Tax paying of key taxpayers will not only relate to the overall taxation performance, but also reflect the overall development trend of social economy to a certain extent. The data based taxation management platform of the Office can follow up key taxpayers in macro and micro level.

In the macro level, tax data within the industry that key taxpayers engage in will be compared via visual diagrams to indirectly analyze development of local social economy and industrial development trend. The Office submitted 6 reports about suggestions in respect of fixed investment and enterprise conditions to Huzhou Municipal People’s Government in 2016 based on the data collected from the key users based follow-up report, thus to provide active support for the municipal government. In a report about development of local real estate industry, the Office mentioned that six of the top 10 tax paying industries relate to real estate, which provides data for decision-making of the government.

In the micro level, the data platform supports data drilling from different dimensions, such as industry, scale, etc., to acquire tax paying details of key taxpayers. The data based taxation management platform monitors key taxpayers in a wide scope, ranging from account opening to invoice items. Hence, tax authority can detect current problems of the enterprise through historical data. On one hand, the platform indicates the potential tax trend; on the other hand, it provides data for the government to focus on operating conditions of key taxpayers and develop favorable policies.

3、 Management of small-sized taxpayer
Small-sized taxpayer refers to a VAT taxpayer with annual taxable sales no more than the thresholds, who is unable to provide complete financial accounting and cannot provide tax materials according to regulations. Different from general taxpayers, small-sized taxpayers are enterprises in the start-up stage or with small scale and are entitled to enjoy beneficial policies and tax preference of the government, such as low tax thresholds and simple accounting.

The tax authority should not only focus on and serve small-sized taxpayers, but also undertake the collection management risks due to limited operating capacity of the taxpayers. For this reason, the Office incorporates a report of risk of small-sized taxpayer management in the platform with the following functions:

♦ Statistics of small-sized enterprises that shall have the right to benefit from preferential policies but have not done so: to timely know implementation of such policies among these enterprises, and to send statistics information about small-sized enterprises that shall enjoy such policies but have not done so to relevant managers who will contact these enterprises and provide the according benefits, as a significant measure to serve small-sized enterprises by the Office;

♦ “Anti-counterfeiting tax control” performance assessment index: to monitor the upgrading of “anti-counterfeiting tax control system” of small-sized taxpayers under the jurisdiction of district office and county office to have an overall control of collection management risks in connection with small-sized taxpayers;

♦ Statistics of thresholds exceeding of small-sized taxpayers and statistics of out-of-control invoices: to timely calculate each index of small-sized taxpayers to monitor collection management risks;

4、 Follow-up of risks incurred by new enterprises
In the tax collection management field, it is not rare that new enterprises issue false invoices and abscond with funds. If such unlawful act cannot be timely detected, followed up and handled, the normal tax collection and management process will be disturbed, and the state interest will be harmed under severe conditions. However, as there are a large number of new enterprises, how to effectively detect the unlawful act and how to follow up the case and fight against all crimes upon detection will be the problems. Failing to properly handle such case will result in a waste of time and effort, and cannot achieve desirable effects.

To prevent the risk of issuing false invoices by new enterprises, the data based taxation management platform of the Office will pay special attention to these new enterprises throughout the process from monitoring, detection to execution and conformation, thus completely eliminating the crime via false invoices.

♦ First, a new enterprise risk pool should be established. A risk pool should be established based on the characteristics of falsely invoicing, including invoicing and tax paying. If an act of a new enterprise meets certain characteristics in the risk pool, it can be determined that there is a risk of falsely invoicing.

♦ Second, risk warning and task should be set up. Risk category should be determined based on enterprise behaviors, and a risk task should be set up for relevant collection management institution in the system.

♦ Third, risk tasks should be followed up and handled. Summary of risk tasks and their details should be provided for every collection management institution. Task summary should timely indicate the number and progress of risk warning tasks to be handled, and the task details are helpful in follow-up and implementation and provide the follow-up results to regulate or confirm risk warning. It should be ensured that follow-up will be carried out upon each warning.

Exploration of future direction of taxation management by data

The data based taxation management platform allows the Office to make great progress in the process of tax informatization. The Office is intended to further explore tax-related big data mining and application through FineReport reporting tool in the future:

♦ In the technology level, a “model lab” will be set up to support research and development of more big data models based on structured and unstructured data. Rapid test and arrangement will be executed based on the new big data model to provide services for business decision-making and risk control and management.

♦ In the business level, customized tax service will be provided to enhance service quality by applying and exploring unstructured data of taxpayers, such as behavioral preference data of taxpayers, recording, application of geographic data, application of power consumption data, medium information and data of employee behavior.Moreover, new technology and new data identified by location-based service terminal will be applied to enable more comprehensive monitoring in possible risky events.