A. M. Digital transformation has marked a turning point in the relationship between taxpayers and governments, especially in the tax sector. According to the World Bank, the adoption of electronic payments has optimized tax filing and payment processes, reducing costs, errors, and time. In this context, El Salvador stands as a notable example in Latin America: 94.58% of companies file their taxes electronically and 80.3% make payments digitally, according to the latest data from the Business Ready (B-READY) project.
This technological transition has had positive impacts in emerging economies, where limited infrastructure and high administrative costs made tax compliance more complex. Electronic payments eliminate barriers such as physical travel, long lines, and direct contact with officials, which also reduces the risk of corruption and streamlines compliance.
The World Bank highlights the importance of integrated tax portals, also known as virtual tax offices, which centralize all taxpayer services. These portals offer a more secure and reliable system, allowing taxpayers to file and pay taxes directly, without intermediaries, improving data protection and the user experience.
However, not all economies have managed to fully implement these systems. In countries that still rely on third-party providers to process payments, taxpayers face challenges such as cumbersome processes, additional requirements, greater security risks, and higher costs. This particularly affects companies in low- and lower-middle-income countries, where each additional step represents a significant burden.
Despite these challenges, data shows that the digitalization of tax payments is a powerful tool for improving tax efficiency and transparency. The Salvadoran case demonstrates that even developing economies can lead in tax innovation if the right policies are implemented and investment in technological infrastructure is made.
Electronic payments not only modernize tax administration, but also empower taxpayers and strengthen tax collection. Their expansion, especially in resource-constrained economies, is key to reducing informality, facilitating compliance, and building trust in public institutions.
