About the client

State Tax Inspectorate Under the Ministry of Finance of the Republic of Lithuania.

The State Tax Inspectorate Under the Ministry of Finance is the tax authority in the Republic of Lithuania. It is an agency under the Ministry of Finance. The main objectives of the agency include: helping the taxpayers with their tax obligations and rights; implementation and enforcement of tax laws, primarily collecting and administering the taxes; collection of revenue for the state budget.

Challenge

Each year, the State Tax Inspectorate (hereafter, the “STI”) prepares over 2.3 million personal income tax return forms, which then need to be reviewed, supplemented when needed, and submitted for a review to the STI by Lithuanian residents.

The option to submit a PERSONAL INCOME TAX return form online first became available back in 2004, when the STI launched its EDS. However, until 2020, this was done using the familiar “grey” forms that many found hard to comprehend. The STI received over 1 million of these forms every year, with some 1.4 million submitted for the tax year 2018.

Despite being widely used, completing these forms independently resulting in a lot of questions, they were unwieldy and time-consuming, and they often contained plenty of errors. For example, some people would simply forget to declare certain kinds of income. The old tax return forms also lacked any integration with the other state-run systems, which resulted in users having to manually enter large amounts of data and select the supplementary documents themselves.

Moreover, the solution did not live up to the expectations of modern users (it was counter-intuitive, often leaving users unsure what to fill in and where, while there was no option to fill in the form on a mobile device). Furthermore, certain groups of society such as non-Lithuanian speakers and the disabled did not have the option to submit the form online.

Therefore, the STI decided to completely revamp and simplify the PERSONAL INCOME TAX return process with a view to reducing the number of errors in the forms they received, and the amount of resubmissions, thereby reducing the involvement of STI, employing the best international practices and reflecting the expectations of experts and Lithuanian residents alike.

Solution

The new interactive PERSONAL INCOME TAX Return Wizard was launched in April 2020. The aim of the Wizard was to simplify the logic of submitting PERSONAL INCOME TAX returns, while integrating data displays in real time from other system, rethinking the visual design of the system and fundamentally improving its intuitiveness.

PERSONAL INCOME TAX Return Wizard was nominated as “THE BEST SOLUTION FOR THE COUNTRY” and “THE FAVOURITE OF THE PUBLIC” at the competition for WORLD SUMMIT AWARDS WSA.

Since it was launched, the Wizard has received very positive feedback from the public. It meets modern-day expectations, increases public satisfaction and engagement, saves time and reduces the number of resulting errors in the forms.

Users are now able to understand the logic of declaring their income, because they are guided through the process in a step-by-step manner. In addition, the Wizard is accessible and adapted to everyone: users can fill in the form on their mobile devices and the interface is adapted for the disabled. It can also be used residents who do not speak the Lithuanian language, who can choose to complete the form in English. The number of errors has been reduced substantially, since the interactive Wizard guides users along every step of the way and makes sure everything is done correctly. Furthermore, the data itself, is displayed in individual forms and is shown in real time, i.e. it fully corresponds with the actual situation on the relevant day.

In summary, the Wizard significantly reduces the amount of time needed to fill out the PERSONAL INCOME TAX return form and lowers the possibility of errors, while increasing user satisfaction and cutting down on the involvement of STI personnel. Although it is too early to compare the data for the 2020 tax year with that of previous years in terms of the completion time, errors and public engagement, the initial results look very optimistic. For instance, while the STI received 1.4 million PERSONAL INCOME TAX return forms for the 2018 tax year, the figure for 2019 – when people started using the Wizard – reached 1.55 million.

Another important benefit was the increased satisfaction of users and civil servants, due to the fact that they could pay any outstanding taxes, debts and contributions directly via the Wizard itself. This is increasing the tax collection rate and eliminating the huge numbers of non-malicious forgetful debtors that the country would otherwise need to pursue.

The public reception of the new PERSONAL INCOME TAX Return Wizard has been highly positive. Residents and experts alike have described the new tool as a long-awaited change, allowing them to save time and expensive mistakes. It has also increased public engagement in the governmental processes.

It looks great. I filled in 6 forms today and I loved the simplicity and clarity of the process.

My compliments to STI for making the procedure about 10 times simpler.

I was pleasantly surprised when, after I filled out each step of what looked to be a beautiful form, the system prompted no errors! Everything was clear and simple. Given this experience, the fact that I had to pay a little extra somehow didn’t matter quite as much to me.

The long-anticipated STI Tax Return Wizard actually works. For me, it was the shortest-ever completion process, as everything was very clear and easy to follow. It took me 10 to 15 minutes to fill in the form and make my payment. All of this despite having to declare both salaries and income from individual activities, sales of assets, securities and the Pension Pillar III fund. Everything was nicely pre-filled, so only minimal corrections were required and those were easy to do. At the very end, you see the Pay Now button (I’d long dreamed of something like this), which connects directly to your e-banking account and lets you pay with ease. There are no more codes to enter and account numbers to dig out before making a transfer. Overall, it was very good. Kudos and compliments to the STI.

Moreover, in response to a survey by Delfi.tv asking: “How would you assess the new tax return system?” 71% of the respondents on social media and 51% of the respondents on Delfi.lt choose to answer: “Excellent, everything is far simpler.”

Impact

The launch of the new PERSONAL INCOME TAX Return Wizard was met with a very positive reaction from the Lithuanian public. This widely-acclaimed solution has met the users’ new expectations by increasing their satisfaction and engagement, saving time and reducing the number of errors in their return forms.

Users are readily able to understand the logic of declaring their income, because they are guided throughout the entire process. In addition, the Wizard is accessible and adapted to everyone: users can fill in the form on their mobile devices and the interface is adapted for the disabled. It can also be used by residents who do not speak the Lithuanian language, who can choose to complete the form in English. The number of errors has been reduced substantially, since the interactive Wizard guides users along every step of the way and makes sure everything is done correctly. Furthermore, the data itself, is displayed in individual forms and is shown in real time, i.e. it fully corresponds with the actual situation on the relevant day.

The new Wizard not only significantly reduces the amount of time needed to fill in the PERSONAL INCOME TAX return form and lowers the possibility of errors, but also increases user satisfaction and cuts down on the involvement of STI personnel. Another important feature is that the satisfaction of residents and civil servants has risen due to the fact that any outstanding taxes, debts and contributions can be paid directly via the Wizard itself. This is increasing the tax collection rate and eliminating the huge numbers of non-malicious forgetful debtors that the country would otherwise need to chase up.

Comprehensive list of system benefits and explanations:

  • Easy-to-grasp processes and steps. In every user experience survey for the old PERSONAL INCOME TAX return forms, the key issues was the terminology. People often struggled to understand concepts and abbreviations such as NPD or PSD, as well as the complicated phrasing. Therefore, one of the goals in designing the Wizard was to simplify and humanise the language used in the system to the greatest possible extent. The new Wizard also offers explanations for the required data. In contrast to the old “grey” form, the new Wizard works not as an online copy of a paper-based form, but rather as a digital platform with functionalities that are on par with popular web applications.
  • Faster process and more accurate data. In the new Wizard, users need to manually enter far less data. This convenience and speed is made possible by a new approach to the data sources. As of 2020, the preliminary form receives all data accessible to the STI from different sources automatically and in real time.
  • Increased efficiency for tax collection and returns. It is now easier to pay arrears to the state and to receive refunds for overpayments. To make tax payments more convenient, the new Wizard is equipped a function that has been long-awaited by Lithuanian citizens: paying any outstanding taxes, debts and contributions directly via the Wizard. This means that if the user submits the form and it is determined that there are tax liabilities, the Wizard will display the Pay Now button, allowing them to immediately make a payment using the E-Government Gateway. On the other hand, if it is determined that the country that owes that resident a refund, the user may enter the preferred bank account or select one from those already known to the STI for a transfer of funds.
  • Fewer errors due to reminders and hints. The new Wizard prompts users with proactive questions, helping them to remember all the types of income they have incurred during the year. Studies have shown that sometimes people simply forget to declare certain kinds of income. This functionality minimises the likelihood of this type of error.
  • Accessible on mobile devices. One of the Wizard’s nicest new features is the option to declare your income on a mobile phone. This saves time, as the Wizard can be used not only on a PC but also on a mobile device. Now that the PERSONAL INCOME TAX return form is speaking the language of the web, declaring one’s income has become so easy that it can even be done on the go, e.g. when taking the bus to work.
  • Option for filling it in in languages other than Lithuanian. The new solution has been made even more convenient by an option to select the language. Currently, the system is available in English, while Russian will be added next year. This also makes it easier for those who speak Lithuanian as a second language to declare their income.

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The project was implemented by NRD Systems, part of NRD Companies, winner of the public tender, which created the software and developed the EDS, along with NFQ Technologies that was in charge of the UX and design as part of a joint activity agreement.

  • The results

  • PERSONAL INCOME TAX Return Wizard is increasing the tax collection rate and eliminating the huge numbers of non-malicious forgetful debtors that the country would otherwise need to chase up.

  • Faster process and more accurate data. 

  • Increased efficiency for tax collection and returns.

  • Fewer errors due to reminders and hints.

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