What is CACAO?ĬACAO stands for Accounting and Organizational Data Storage and Consultation System. To support TAs on this front, the Inter-American Development Bank (IDB) has developed an open-source software called CACAO, to digitally capture accounting data and generate the intelligence necessary to improve compliance. By accessing accounting data digitally, TAs can move forward with the implementation of pre-filled Corporate Income Tax declaration, which will help firms file their taxes faster and more accurately, reducing their compliance costs.

Furthermore, it can also help improve the service TAs provide for companies. High-quality data can pave the way for gaining better insights and facilitate the TA’s job of ensuring that companies pay what they owe. These key factors can impact profitability and the types of taxes firms pay to governments. In this sense, digitally collecting accounting information from companies is crucial to enable TAs to better measure business activities, such as operations, financing, investments, the performance of companies, and their contractual relationships.

However, to reach the next level of digitization, known as Tax Administration 3.0, TAs must further capitalize on data and automation to improve their services and processes. For example, almost all TAs in the Americas already receive 100% of their tax returns online, many already have electronic invoicing, and some even have introduced electronic payroll. Tax administrations (TA) have usually been at the forefront of digital transformation in several countries.

One promising area for governments is the creation of Tax Administrations 3.0 by using digital technologies to provide a more seamless and frictionless service for citizens and firms. Digital transformation is changing how government agencies relate to citizens, allowing them to meet their constituents’ needs faster, fairer, and more transparently.

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