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Ninth ACIS International Conference on Software Engineering, Artificial Intelligence, Networking, and Parallel/Distributed Computing

E-Tax Invoice System Using Web Services Technology: A Case Study of


The Revenue Department of Thailand
Sukanya Suwisuthikasem Songsri Tangsripairoj
The Revenue Department of Thailand Department of Computer Science,
Bangkok 10400, THAILAND Faculty of Science, Mahidol University,
Tel. +66 2 272 8735 Bangkok 10400, THAILAND
E-mail: sukanya.suw@rd.go.th Tel. +66 2 354 4333
E-mail : ccsts@mahidol.ac.th

Abstract software developed by different programming languages


on heterogeneous platforms. This is a part of hurdles for
This research project proposed an "e-Tax Invoice the RD in developing application to communicate with
System" using Web Services (WS) technology for the Business’ applications.
Revenue Department of Thailand (RD). This system uses Web Services (WS) is a Service-Oriented Architecture
four WS technologies namely XML, WSDL, UDDI and (SOA), a loosely coupled mechanism for software
SOAP, hence the system is able to communicate with providers to make modularized functionality accessible
several applications on heterogeneous platforms. In over a computer network. WS provides a new and
addition, the proposed e-Tax Invoice System applies two excellent solution for data integration among
security technologies: SSL as a secure channel for data heterogeneous systems. It presents an innovative software
exchange and Hash Function for transforming a plain technology which provides application-to-application
password into an unreadable password. The proposed interaction. Web Services are based on communication
system is able to collect tax invoice data from taxpayers protocols (Simple Object Access Protocol: SOAP),
especially Business. Through the system, Business can service description (Web Service Definition Language:
send tax invoice data immediately to the RD once the WSDL), and service discovery (Universal Description
payment occurs. Therefore, the proposed system can Discovery and Integration: UDDI) and are built on top of
provide up-to-date data to generating reports for the RD existing web protocols and based on open XML -
Official. The report can help improve the RD’s work eXtensible Markup Language- standards. This will
processes especially tax payment auditing. Moreover, the support the new system to interact with Business easily
proposed system allows Customer and Business to search [1], [2], [3].
tax invoice data online. The research also performed The research project uses the WS technology to develop
comparative analysis which indicates that the e-Tax e-tax invoice system. The proposed system is expected to
Invoice System can solve problems in the current system collect tax invoice data from Business and provide
and enhance the RD’s work processes concerning the tax benefits to Customer and Business taxpayers including
invoice systems. the RD Official (Supervisors). For Customer and Business
taxpayers, they can online, view and print tax invoice. For
1. Introduction the RD Official, the proposed system can provide sales
and purchase reports of each Business that can be used for
The Revenue Department (RD) is one of the three tax tax audit. This is most important benefit of the proposed
collection agencies in Thailand. It is responsible for system for the RD. Moreover, with the proposed system
collecting 2/3 of the national tax collection. The RD in place, Business does not need to keep tax invoice slips.
realizes the significant role of information technology in As a result, the proposed system can save cost for paper
enhancing national tax systems and constantly develops and for keeping tax invoice slips. This is major benefit for
information system to facilitate tax collection, particularly Business, especially large Business. Beside these, the
Value Added Tax (VAT). Tax invoice data is a part of proposed system also makes work process more user-
VAT information system that at present the RD cannot friendly for the RD Official, and the Business taxpayers.
collect. This creates a loophole for tax fraud. Some
Business use tax invoice slip dishonestly for tax refund 2. Existing tax invoice system
fraud or to avoid tax payment. Tax fraud and avoidance is
a crime and everyone in society loses out because of it. It The Tax Invoice System is a system dealing with tax
means there is less to spend on many important services. invoice data. This includes generating, collecting and
However, presently most Business use computer for inspecting tax invoice data. Tax invoice is issued by VAT
collecting and generating tax invoice and keep tax
invoices data in electronic form. Each Business uses

978-0-7695-3263-9/08 $25.00 © 2008 IEEE 931


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DOI 10.1109/SNPD.2008.83
registered business operators when Customer consumes technologies. As a result, they can provide efficient
goods and services. There are two types of Customer: services to business and taxpayer.
corporate and individual. In case of corporate, tax invoice
slips are recorded in Business’s account for generating 3.1 Canada Revenue Agency (CRA)
reports. For individual, tax invoice slips are used to get
cash refund from Customer’s business organization. CRA provides many e-services for Customer and
Moreover, the RD Official use tax invoice slips as a Business. To serve Customer more efficiently, CRA
tool to audit Business’s VAT payment. If in every sales provides Goods and Services Tax/Harmonized Sales Tax
transaction, Business generates tax invoice slip, and uses (GST/HST) filing and remitting options. Taxpayer’s
all transactions to generate sales report and purchase GST/HST return and remittance information can be filed
report etc. The RD Official can use data from the reports electronically using electronic data interchange (EDI)
to audit tax payment. As a result the RD can enhance technology. Nowadays, Customer and Business taxpayers
VAT collection significantly in terms of correctness and can use CRA’s secure, automated self-service channels to
completeness. meet their tax obligations. Internet users can interact with
CRA directly or link to CRA Web site from other
government sites [4].

3.2 HM Revenue & Customs (HMRC)

The HMRC provides online services that are quick


and convenient for Customer and Business to deal with a
whole range of tax excise and benefit related issues. The
example of HMRC’s online service is VAT online
services, electronic Binding Tariff Information (eBTI),
New Computerized Transit System (NCTS web service),
Figure 1. The existing tax invoice system etc. Customer and Business can register, make VAT
Returns and request changes to the registration details
Figure 1 illustrates the system overview of the existing online via VAT online service. Traders can use eBTI to
tax invoice system. There are three parties involving with request a ruling from the Customs Department on the
this system: customer, business, and the RD Official. The correct Tariff classification on their goods. The NCTS
significant data is tax invoice data that was generated web service is developed to allow electronic declarations
when sales transaction occurs. The system composes of to be made for Community and Common transit. NCTS
eight main processes: Select Products/Services, Compute web service provides the ability to input NCTS web
Amount of Product’s Price and VAT, Make a Payment, service declarations and arrivals online. These services
Generate Tax Invoice Slips, Summarize Tax Invoice Data enable Customer and Business to contact with HMRC
and Generate Report, Send Tax Invoice Slip to Customer, with more ease. [5].
Request Summary Data and Reports, and Audit Tax
Invoice Data. 3.3 Inland Revenue Authority of Singapore
There are many problems in the current tax invoice (IRAS)
system as follows:
1) Business pays large amount of moneys to purchase The IRAS provides several e-services to taxpayers for
paper for printing tax invoice slips and uses huge example e-filing, e-stamping, E-services Authorization
warehouse to keep large amount of tax invoice slips. System (EASY) and MyTaxPortal. EASY is an online
2) RD Official takes at least one day to go to business business authorization system that allows organizations to
place and wait for reports. authorize staff or third party organizations to access
3) Business can make change/edit reports before send government e-services on their behalf. MyTaxPortal is an
to supervisors. As a result, the RD cannot inspect internet portal that organizes around taxpayer’s needs, to
business’s tax payment effectively. perform taxpayer’s transactions with IRAS. MytaxPortal
allows taxpayers to interact with IRAS with greater ease
3. Web service technology in revenue and convenience as part of IRAS efforts in nation
building. Before Business or a third party (e.g. tax agent)
departments can access e-Services available under MytaxPortal,
Business must first authorize the staff or the third party
The Revenue Department of many countries tries to
enhance services for providing to both business and
taxpayer using web, Web Services and security

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Business must first authorize the staff or the third party its partner can legally issue tax invoice in accordance with
via EASY [6]. the tax law or not. Moreover, the WS can verify the
existence of its business partner 3) VAT Return to Tourist
3.4 Internal Revenue Service (IRS) of the Service: Provide information on Business that joins VAT
United States refund for tourist service. The service prevent forging of
tax invoices which effectively increase tourists’
The IRS provided the internet e-filing to modernize confidence in Thai business 4) VAT Exempted Jewelry
the e-filing system. This is an important component of Business Service: Provide the information of jewelry
IRS’s re-engineering efforts to improve service, enhance importers registering with the RD who are exempted from
enforcement, and modernize technology and work VAT. This is useful for the Customs Department to verify
processes. The e-filing is an internet-based system that the information with the taxpayers and checking those
uses standardized XML to provide Business the capability VAT exempted companies, thereby making VAT
to electronically file forms. The IRS also upgrades the collection correct and complete 5) Personal Income Tax
existing e-filing system to be the One-Stop e-Filing: Calculation Service: Provide an automatic calculation of
immediate acknowledgement (within 48 hours of e-filing) Personal Income Tax liability (PND 91) 6) Tax Collection
[7]. Summary Service: Provide information of the total tax
collection of the RD from all tax types and tax return
3.5 DG Tax & Customs (DG) forms 7) Joint Venture and Foreign Company Service:
Provide information on Business which have not
DG realizes that the efficiency financial report data registered with the Department of Business Development
exchange is the most important thing for the government, but have registered with the RD. This service allows
Business and individual taxpayers. Since, there are agencies to investigate and verify such existence of
various formats of financial reports. Government Business 8) Corporate Income Taxpayer Info Service:
departments have to manually entry data. This can cause Provide general information of Business. The information
incorrect data. To solve the problem, Dutch Taxonomy is grouped by industry sector. In addition, the service
Project (DTP) is founded. DTP is responsible for helps Business getting a list of prospective business
developing Financial Reporting Chain using Extensible partners. Presently, all these web services are available on
Business Reporting Language (XBRL), a language for the RD website - http://www.rd.go.th-.
electronic communication of business and financial data
which is revolutionizing business reporting around the 4. System analysis and design
world [8]. DTP can generate standard format of financial
report in the Netherlands and Europe. This can save cost As illustrated in Figure 2, the proposed e-Tax Invoice
and time for financial report data exchange and enhance System architecture presents seven core components: (1)
efficiency of financial report. In addition, DTP makes the User Authenticator (UA), (2) Data Provider (DP), (3)
process of data processing and report generating faster Data Collector (DC), (4) Login Manager (LM), (5)
and easier to use. Report Generator (RG), (6) Log Report Generator (LRG),
and (7) User Manager (UM). The proposed system
3.6 The Revenue Department of Thailand (RD) separated into two parts (1) Front-end for serving
Customer/ Business (2) Back-end for supporting the RD
The RD provides several e-services to taxpayer e.g. e- work processes. The business process diagram of the
Filing, e-Form, Web Services. Taxpayers can file PIT, proposed system is presented in Figure 3.
CIT, VAT and SBT payment online via the RD website. In the front-end, there are three Web Services: UA, DP,
Moreover, the RD provides electronic tax forms such as and DC. From these Web Services, there are two Web
PND90, PND91, PND50, PP30, etc. so that taxpayers can Services for customer/business: DP and DC. The process
download, fill out and submit the filled tax form to the starts with customer/business sending request message to
RD online. Taxpayers can also use paper forms printed the system. UA authenticates incoming message using
from the RD website to file at the RD Branches. Hence, data from the RD’s User Access List and the RD’s User
the e-services help solve the problems in remote RD Account. If message is authorized, UA will record user’s
Branches that have insufficient form for taxpayers [9]. usage information to the RD’s Log database. Then, UA
WS provided by the RD are (1) TIN/PIN Verification sends authorized message to requested WS. The
Service: Check the validation and existence of Tax Customer/Business can develop applications to request
Identification Number (TIN) and Personal Identification tax invoice data from DP to generate tax invoice slip
Number (PIN) (2) VAT Registrant Info Service: Provide online. DC collects data only from Business, which
information of taxpayer who is the Value-added tax Business send tax invoice data to DC online.
registrants. The WS can help Business to validate whether

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status message back to client. Business can send sales
transaction data online via DC and DC will send collected
result message back to Business. Remark: the message
using SOAP message and its format satisfies defined
message format in WSDL document published by the RD.
• Data Provider (DP) is responsible for generating tax
invoice data that corresponds to specified criteria and
sending back to client in XML format.
• Login Manager (LM) is responsible for user login.
LM verifies username and password. If valid, LM
authorizes the RD official to access the system. Otherwise
LM shows login form with denied message for user to
Figure 2. e-Tax invoice system architecture input username and password again.
• Report Generator (RG) is responsible for creating
tax invoice report and shows it on screen. Moreover, RG
can also generate graph and display it on screen.
• Log Report Generator (LRG) is responsible for
generating log report and display on screen. LRG will
show both daily and monthly log reports.
• User Manager (UM) is responsible for user
management. RD Official can add/delete/update user
account in the system. UM will encrypt password using
hash function - the one-way encryption: data will be
encrypted to unreadable format and cannot be reverted –
and then store it to database.

5. Implementation
This project uses Microsoft Visual Studio .NET 2005 to
develop the system, SQL Server 2005 to store database,
XML spy to generate XML schema. Moreover, this
Figure 3. Business process diagram system uses communication channel bandwidth 1000
Mbps and SSL channel to communicate with each other.
These two components use SOAP message to Furthermore, the system has firewall to screen between
communicate with Customer and Business. For security external clients and servers. As a result, the proposed
propose, the message is sent in SSL channel to system can provide effective and secure communication
encapsulate data from unauthorized user. Furthermore, among stakeholders. The proposed system will be
these two web services have interaction with the existing developed in simulated environment. When the system is
RD’s Web Services: TIN/PINService and VATService. fully developed and tested successfully, it will then be
In the Back-end, there are two Web Services - RG and deployed on the RD server.
LRG - and two components: LM and UM. These are used User interface of the e-tax Invoice System is divided
by the RD official. LM allows the RD official to login to into three parts: Customer, Business and the RD Official.
the system. When the RD official has login already, RD The following are some examples of user interface for
Official can choose operation: view report provided by each user group.
RG, view log report provided by LRG and 1) Customer: View Tax Invoice Data Page is shown
add/delete/update user account provided by UM. in Figure 4. In this page, user can specify conditions:
• User Authenticator (UA) is responsible for customer’s name, surname, TIN, business’s name and
authenticating client and logging user’s usage Date corresponded to required tax invoice slip. Tax
information. UA will verify user’s right to access invoice data shown in Figure 4 is generated by using
requested web services. If user has the right to access, UA XSLT file to transform received xml document to html
will send requested message to web service specified in document [10], [11].
requested message. Otherwise UA returns denied message 2) Business: Send Tax Invoice Data Page is shown
to user. in Figure 5. In this page user can fill in tax invoice slip
• Data Collector (DC) is responsible for collecting tax detail –Customer detail and Product detail- After the data
invoice data from Business and sending the collected

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was sent to the RD online, then a sending result 6. Comparative analysis
message is shown.
3) The RD Official: Purchase/Sales Summary In Table 1, the researcher compares work processes
Report Page is shown in Figure 6. In this page user can between the current system and the proposed system of
view monthly sales and purchase reports. These reports three user groups: Customer, Business, and the RD
can help the RD Official especially tax supervisor to Official.
examine business's tax payment and tax return. To view For customer, they can search tax invoice data
report, user can specify criteria: Business's name, generated since the past three years. This facilitates
Business's TIN, Business's Branch Code, Customer's customer to search tax invoice data via browser rather
name, Customer's TIN, and Sales date used to generated than search from tax invoice slips. From this, they can
report. search tax invoice data faster and easier.
For business, business can send tax invoice data to RD
immediately once the transaction occurs. As a result,
Businesses do not have to print and keep the copies of tax
invoice slip for the RD because the tax invoice data has
been sent to the RD already. Each year the proposed
system can save Business a lot of money from reducing
cost of paper for tax invoice slip. For example,
Metropolitan Waterworks Authority (MWA) has
approximate 1,608,000 transactions per year. [12] MWA
has to print two copies of tax invoice slip for each
transaction so MWA must print 3,216,000 tax invoice
slips per year. With the proposed system MWA will print
1,608,000 tax invoice slips only. It is a large amount of
Figure 4. View Tax Invoice Page paper that is saved by using the proposed system.
For the RD official, presently when supervisors at RD
want to review report for audit business’s tax payment,
they must go to Business’s office and request it from
them. Usually, it takes the RD Official at least three hours
starting from requests report until receives report. From
this, it consumes time and cost in this process for the RD
Official.
In contrast, with the proposed system, when the RD
Official wants to view report, he/she only login to the
system and specify criteria: customer/business’s name,
TIN, date used for generating report. From this, the RD
Official spends only approximately five minutes for this
operation. Moreover, since business had sent tax invoice
Figure 5. Send Tax Invoice Data Page data to RD online, data in the system is always up-to-date,
so does the report. With efficiency in acquiring the report,
the RD Official can audit Business’s tax payment more
effectively and quickly. This will benefit the RD as a
whole.
From comparison analysis between the current system
and the proposed system, the research found that the
proposed system can solve the problem in the current tax
invoice process. Moreover, the system can facilitate all
stakeholders in the system.

7. Conclusions

Figure 6. Report Page This research project proposed an "e-Tax Invoice


System" using Web Services technologies: WSDL,

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Table 1. Comparison of processes in the current system and the proposed system
User Group The Current System The Proposed system
Customer 1. Make a payment. 1. Make a payment.
2. Request tax invoice slip from Business owner. 2. Request tax invoice slip. (Optional)
3. Wait for tax invoice slip. 3. Search tax invoice data via browser.
4. Keep tax invoice slip for using in financial 4. View and print tax invoice slip online.
transaction.
Business 1. Store tax invoice data to database. 1. Send tax invoice data to RD immediately the
2. Print two copies of slips. transaction occurs.
3. Give master copy to Customer. 2. Print tax invoice slip for customer. (Optional)
4. Keep copy of tax invoice slip for the RD Official. 3. No need to print and keep tax invoice slip for
5. Generate report for the RD Official. the RD Official.
RD Official 1. Go to business’s office. 1. Log in to e-Tax Invoice System.
2. Request and wait for reports. 2. View report online with up-to-date data.
3. Review report for tax payment auditing.

8. References
SOAP, XML and UDDI; and adopting security
technologies: SSL and Hash Function. The proposed [1] Chuang-Cheng Chiu and Chieh-Yuan Tsai, “A Web
system is expected to enhance efficiency of the RD work Services-Based Collaborative Scheme for Credit Card Fraud
processes concerning tax invoice which will increase Detection”, Proceedings of the 2004 IEEE International
effectiveness and transparency in tax administration of Conference on e-Technology, e-Commerce and e-Service
Thailand. The proposed "e-Tax Invoice System" can solve (EEE’04), pp.177-181, March 2004.
problems in current tax invoice work processes especially [2] Min-Hsiung Hung, Fan-Tien Cheng, and Sze-Chien Yeh.,
those related to control, prevent and detect fraud in tax “Development of a Web-Services-Based e-Diagnostics
payment and tax return. Furthermore the proposed system Framework for Semiconductor Manufacturing Industry”, IEEE
Transactions on Semiconductor Manufacturing Industry, Vol.
can provide faster and easier services for Business and 18 NO.1, pp. 122-135, February 2005.
Customer. [3] Gustavo Alonso,Fabio Casati, Harumi Kuno, and Vijay
The e-Tax Invoice System is implemented to provide machiraju, Web Services Concepts, Architectures Applications,
tax invoice data for Customer and Business. They can Springer-Verlag Berlin Heidelberg, Printed in Germany 2004.
search tax invoice data online. Moreover, the new system [4] Available From: http://www.cra-arc.gc.ca/menu-e.html, Last
provides service to collect tax invoice data immediately Update: Not Available, Create Date: Not Available, Accessed
once sales transaction occurs from Business and reports Date: 17 July 2006.
with up-to-date data for the RD Official. These reports [5] Available From: http://www.inlandrevenue.gov.uk, Last
can support the RD Official to audit business’s tax Update: Not Available, Create Date: Not Available, Accessed
Date: 17 July 2006.
payment. [6] Available From: http://www.iras.gov.sg/ESVPortal/our_
This system is expected to enhance efficiency of work eservices/index.asp, Last Update: Not Available, Create Date:
process at RD that will increase efficiency and Not Available, Accessed Date: 17 July 2006.
transparency in the tax administration. The system is used [7] Internal Revenue Service of the United State, “IRS e-File for
to solve the problem in the existing tax invoice system for Large Taxpayers Filing Their Own Corporate Income Tax”,
example control and anti-fraud in tax payment and tax February 2006.
return. Furthermore, the system can provide faster and [8] Available From: http://www.xbrl.org/Home/, Last Update:
easier services for Business and Customer. Not Available, Create Date: Not Available, Accessed Date: 27
With the proposed system, the RD can increase quality September 2007.
[9] Available From: http://www.rd.go.th/webservice/, Last
of report by adding a component to link the proposed "e- Update: Not Available, Create Date: Not Available, Accessed
Tax Invoice System" with the e-Supervision system that Date: 27 September 2007.
requesting actual tax payment data. Then, the proposed [10] Available From: http://looselycoupled.com/glossary/XSLT,
system can generate new report that compare of two types Last Update: Not Available, Create Date: Not Available,
of data: (1) tax invoice data and (2) actual tax payment Accessed Date: 25 January 2007.
data using line graph format. This can assist the RD [11] Microsoft, 1913A: Exchanging and Transforming Data
Official in tax payment auditing. Moreover, the RD Using XML and XSLT, Microsoft Corporation, Edition 02/2001.
Official can use historical accumulate tax invoice data to [12] Available from: http://www.mwa.co.th/download/, Last
forecast tax collection of VAT in the future. Update: Not Available, Create Date: Not Available, Accessed
Date: 25 June 2006.

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