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Live from DIALOG – Agile Tax Management Using Rules and BPM


I missed a session from longtime ILOG customer eBay but then I attended one on Agile Tax Management Using Rules and BPM by the Tax Administration Service of Mexico and EMC. The project being discussed was very successful, they say, and based on a combination of EMC’s BPM tool (Documentum) and ILOG’s rules.

SAT, the tax authority, is responsible for all the federal taxes in Mexico – about 25M taxpayers. Each year there are about 18M changes to the database of taxpayers and this called a lot of trouble. In 2005 tax collection as a percentage of GDP was one of the lowest – 10% v OECD average of 36%. It was also very expensive to collect – 10 cents on the peso went in costs. Registration as a taxpayer was required, expensive and difficult.

To fix this, many things done in parallel on the law and technology side. New systems were designed to be easier to use as a taxpayer, lower cost and flexible (because Mexican politicians, like all politicians, change the rules all the time). The project was always SOA-based, identified 13 services and got started with 3 services including taxpayer identification.

The project identified a need for a BRMS because the rules handle 1,800 different taxpaying scenarios and the rules change often. There was a desire to have the business folks make rule changes without IT support while also giving taxpayers direct feedback. JRules was used to develop a dynamic questionnaire and since November 2006 it has handled more than 2.5M operations on taxpayer data.

Benefits were immediate with an 8% growth in tax revenue overall and income tax paid by people grew by nearly 13%. 544,000 new taxpayers added in 2006  (up 35%). Clear success and a great illustration of how a government agency can, despite all the inherent challenges, use information systems very effectively. They are adding risk assessment, distributing workload for document delivery and adding rules to the customs modernization program.

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