Costa Rica's new government, which took office in 2006 (President Oscar Arias Sánchez, 1987 Nobel Peace Prize), has embarked on the pursuit of an economic model designed to boost the country's competitiveness and spur higher economic growth. In connection with these efforts, officials have undertaken a number of measures to streamline business processes   to increase the government's policymaking effectiveness. Both the central government and the overall public sector ran fiscal surpluses in 2007. The country has succeeded in attracting high-tech investment. And thanks to state modernization efforts, there has also been a major push for e-government to improve efficiency and transparency of government institutions. 
The Costa Rica Ministry of Finance, or Ministerio de Hacienda de la República de Costa Rica, is responsible for Costa Rica's internal revenue system. Like its counterparts in other countries throughout the region, the lack of adequate administrative resources and widespread tax evasion of the past has limited the department's ability to collect revenues and expand the tax base. Although tax evasion has been reduced and a commensurate growth in tax collection has been achieved in recent years, payment evasion still remained high. As a result, the ministry launched its New Integrated Model of Digital Tax and Revenue Management  initiative, and began evaluating a number of commercial, off-the-shelf tax management solutions in  2006 with the goal of:  
	combating tax evasion
	increasing total tax collection
	minimizing fiscal deficits through income collection and cost efficiencies 
After a careful review of a number of industry-leading applications and solutions, the Ministry of Finance chose SAP Tax and Revenue Management package for Public Sector solution portfolio with implementation partner BearingPoint. The solution runs in Windows and Microsofts SQL Server database, and functional gaps will be covered by custom developments in Java and .NET.
Additionally, the Costa Rica Ministry of Finance contracted Grupo Asesor en Informatica SA., advisors in IT for the enterprise, to support  the internal project team for business process modeling; requests for proposal; elaboration and evaluation;  feasibility studies; and project management.

For the Costa Rica Ministry of Finance, deploying leading-edge technology to streamline operations and increase revenue has played a central strategic role for the better part of a decade. The government implemented the SAP ERP Central Component (SAP ECC) in 2001 for its government financials functionality, which laid the technology foundation for the subsequent, optional implementation of the SAP Tax & Revenue Management for Public Sector package. 
By leveraging advanced technology,  the Costa Rican government is:  
	Unifying the entire tax and revenue management life cycle with one consolidated software package to cover all stages of tax administration  
	Giving officials the ability to efficiently add new tax schemes within the solution as the country's public policy mandates change. 
Costa Rica's tax authorities can now register new taxpayers and new accounts, set up filing frequencies, and support multichannel filing to support both paper-based forms and electronic filing. The new system provides the Costa Rican government and its taxpayers with an integrated view of tax records. It also streamlines the ability to process tax returns and payments, and offers taxpayers a way to communicate with  the Administración Tributaria , the Costa Rican tax authority, online via an integrated Web portal. 
The new tax portal is fully operational and currently capable of processing the country's major personal and business taxes. Plans are in place to add the remaining taxes and taxpayers to the integrated system through an ongoing expansion and rollout over the next 12 months. At the completion of Costa Rica Digital Tax Payments initiative, the entire population of taxpayers, all taxes and the entire tax value chain, from registration, filing and auditing, will be supported by a single integrated system.

Yes

Yes

The implementation of the new tax and revenue management system and user-friendly portal is enabling the Costa Rican government to deliver a highly modern financial administration system capable of helping the country achieve advanced stages of development by:   
	providing a platform that will allow to  grow its tax base when required  
	curtailing tax evasion among both business and private citizens through greater  monitoring and controls  
	generating new streams of revenue necessary for capital investment, social equality, and greater levels of future economic growth
	allowing taxpayers to file returns and pay taxes electronically.  
	satisfy increasing citizen demands for additional automated services  
	increasing agency efficiency 
During the November 2008 go-live for the project's first phase, the group of 700+ participating Major Taxpayers  paid the main five types of taxes using the system. In addition to standard corporate tax return processing and analysis, end-of-year payments for the companies were also processed, which included four more kinds of taxes. 
The benefits have been considerable. Businesses can now file and pay taxes remotely at any time. Transaction costs for both companies and the government have been greatly reduced. Operational costs have also declined as paperwork, typing errors and use of cash is eliminated. Similar cost reductions can be estimated for Costa Ricas internal revenue department. Data errors and citizen complaints have also been significantly reduced. And the Ministry of Finance is already reporting success with the new model in this first phase and expects increase in revenue collection, reduced tax evasion, and gains in process efficiencies. 
Additional benefits are expected as the project enters its second and third phases, when all taxes and the complete tax base start using the New Integrated Digital Tax and Revenue Model.  
The second phase of the project begins in July 2009, and will incorporate the rest of the Major Taxpayers for a total of 22 taxes. Phase 3 will finally incorporate the entire tax base of around 1.2 million taxpayers.
By then, officials expect that the online tax payment system will account for a much higher percentage of tax revenues in Costa Rica with a significant increase in the amount of filings. 
The new system has had a positive impact on the revenue process. Internal business processes have been streamlined  and the resulting improvements are expected to  spill over into other key areas like taxpayer audits and overall modernization. The time it takes to collect tax return information has been reduced from several days to a matter of hours. The solution plans to increase data quality, with key cost reductions in printing, paperwork and infrastructure. 
The solution also has had an important impact on increasing the efficiency of civil servants and even more is expected with phases 2 and 3

Cost reductions for individual tax payers have been achieved through online processes, helping the taxpayer avoid trips to the revenue agency or the banks for tax declaration and payments.  Additionally, there is also an increase service and customer focus on the taxpayers through efficient processes and increased security in their transactions.

For Costa Rica, this implementation represents a leading-edge project for tax and revenue management in the country. It is also one of the first regional initiatives in Latin America that uses IT systems and off-the-shelf software to help process tax payments at a country level. 
The technology used in the project also sets a new global precedent. It makes Costa Rica one of the first countries in the world to successfully launch the latest version of SAP Tax and Revenue Management package from the SAP for Public Sector solution portfolio. The scope of the solution is very comprehensive, and includes transactional processing, business intelligence, data mining, and digital signature.  Additionally,  a strong collaboration from different governmental entities is required to thoroughly complement a modern business intelligence approach like the digital signature initiative.

Costa Rican officials, overcame a number of challenges over the course of the project :  
	Obtaining the commitment of key stakeholders, including taxpayers, policy makers, and public administration workers     
	Achieving buy-in at all levels through knowledge transfer and training
 Overcoming resistance to change from public administration and taxpayers was a major challenge. To address these pain points, project leaders have worked closely with corporate taxpayers in a series of comprehensive training programs designed to ease the transition to the new system. Similarly, public administration officials and workers within the Ministry of Finance will face significant reorganization efforts as they adapted previous business processes and roles  to the new model and system. Here, too, knowledge transfer and training provided the critical means to obtain  institutional buy-in at all levels. At the end of the Phase 1 go-live, the commitment of all stakeholders, from Administración Tributaria  staff to commercial banks and business users, has helped to overcome these challenges. Moving forward, project leaders recognize that a proactive change management process will have  a key strategic importance in the second and third implementation phases. One of the other initial key challenges was identifying a team to execute the project.  In the end, a team of both national and international professionals was selected to achieve the right balance of experience for sustainable, consistent knowledge transfer. 
The resistance was overcome by involving all project stakeholders. Initial meetings were held at several departmental levels to explain project objectives and potential benefits. Implementation teams constantly reinforced the idea that new staff responsibilities under the new system would  more than offset potential redundancies.

The project management of the Costa Rica Ministry of Finance carried out a complex assessment of 3 options: 
	Acquire world-class software packages;
	Pursue a custom-developed system; or
	Accept the donation of an information system from a foreign country.  
For this assessment, a group of tax and IT experts from Costa Rica traveled  abroad in order to learn about best practices in tax management. 
The final decision was to buy a word-class software package with inherent best practices and a business process platform approach that could be implemented by the entire business organization, and not just the IT organization. Ultimately, this is a business project that is enabled by IT, and that is aligned to tax strategy.

Achieved

The challenges encountered in a project of this nature are unique in scope and value.  They will undoubtedly emerge in other similar projects in the future, particularly in an area like the public sector where undertakings as critical as tax payment processing have a far-reaching impact for the whole country. The experiences and key learnings gleaned from this project are, of course, available to those organizations and communities who have decided to embrace similar projects.  
The focus of this project, however, is not only business process efficiency, but the improvement of government services for citizens.  In the end, the ultimate value of such a project must be measured in a government's ability to increase the quality of life for its citizens, and to provide a means for greater interaction and transparency.

The innovations we achieved in this project were made possible because of the broad commitment to change management, the sponsorship of the steering committee, and the collaboration with other organizations within the Costa Rican public sector.