E-filing failures should be a wake-up call for public services

Commissioner of Inland Revenue Benjamin Chan Sze-wai rightly apologised for the inconvenience caused to the affected, saying the tax department had an “unshirkable responsibility” to fix the problem. He assured the public that no taxpayers would be penalised over the incident, adding that penalty remissions would be granted, payments refunded and the two prosecutions withdrawn. “The system is under the Inland Revenue Department and is not ideal … We will continue to improve the system and hope that such misunderstandings will not happen again,” he said.

The confusion should not have happened in the first place. Worse, an investigation initiated by the city’s Ombudsman revealed that similar problems were spotted as early as 2022, but were not resolved until tens of thousands were caught last year. It was found that ambiguous instructions on the eTAX submission and signature interface misled users into thinking that authenticating themselves via iAM Smart completed their filing, when in fact they had to return to the eTAX platform and wait for confirmation. Between May 2 last year and January 31 this year, 489,425 taxpayers tried to submit electronic returns using a digital signature on iAM Smart for the 2024-25 tax year; of these, 33,019 ended up with incomplete submissions.

The tax department conceded that the failed submissions were due to various factors, such as user actions or network anomalies. About 80 per cent of the 33,000 affected taxpayers had reused “iAM Smart” to sign and submit their tax returns successfully before penalty notices or notices of estimated assessment were issued, including some 14,000 who did so within the same day of the first attempt. The department later adopted steps to address the issues, including pop-ups, confirmation messages, enhanced wording and autosave.