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Among the main objectives of the implementation

of the e-Filing system are to increase the speed and

effectiveness of the processing of tax returns submitted

by taxpayers to the tax agency. This is important because

every year the number of eligible individual taxpayers

increases progressively, directly affecting the work load

and time required by the tax agency to process tax forms


The e-Filing system is open around the clock while,

in comparison, manual filing is limited by the operation

hours of the state tax offices. Furthermore, the main bulk

of the tedious and lengthy process before the advent

of e-Filing was the heaps of data entry work required.

Manual filing increases operating costs and data

entry errors. The processing time and potential errors

are greatly reduced in e-Filing because the inherent

characteristics of an e-Filing system help taxpayers

fill out their tax forms more efficiently. Tax refunds to

tax payers can similarly be processed faster and more

efficiently due to the computerised system.


Back in 2004 and 2005, when the first step towards

computerisation of the Tax Filing processes began, the

system was rather rudimentary in nature. Taxpayers could

only download the tax filing forms in Microsoft Excel

and Adobe PDF formats. After filling in and printing the

forms, taxpayers still had to go over to their respective

state tax offices and manually deliver the forms. While

this system was a step forward, it was still troublesome.

The next logical step for LHDNM then was to work

on a system that would enable tax submissions to be

completed over the web effortlessly. This e-Filing system

would eliminate most of the hassles and difficulties

associated with the annual submission of tax returns.



While the concept of e-Filing is simple and very

attractive, building a system that is robust and safe was

not an easy task given that e-Filing is essentially an

online web service. LHDNM was concerned about the

increasing threats of malicious cyber-attacks on business

applications and networks that rely on the use of digital

credentials to control how users and entities access

sensitive data and critical system resources.

To cultivate taxpayers’ trust, the e-Filing system

is protected by Public Key Infrastructure (PKI) based

security with digital signatures on top of common

security features such as firewall, intrusion prevention

system (IPS) and anti-virus. PKI technology which

strengthens online transaction security, and at the same

time protects users’ sensitive information is the main

strategy deployed to tackle online security issues. This

directly addresses processes that require proof of the

identity of participants in a transaction; proof that the

contents of communications have not been tampered

with; and protection of sensitive or restricted data.

In other words, it addresses three critical elements in

internet security which are authentication; integrity

and confidentiality. Another element addressed is the

principle of non-repudiation which means that it will not

be possible to successfully challenge the validity of any


PKI are necessary to help ascertain the identity of different

people, devices, and services. In a nutshell, PKI goes way

beyond the use of user IDs and passwords, employing

cryptographic technologies such as digital signatures

and digital certificates to create unique credentials that

can be validated beyond reasonable doubt and on a

mass scale. PKI technology is already used more widely

than one might think. It is a cornerstone of how data is

encrypted as it is passed over the internet using Secure

Sockets Layer (SSL) and Transport Layer Security (TLS).

Basically without PKI any sensitive online or ecommerce

transaction would not be practical.

To drill down into how PKI actually functions,

cryptography is deployed to provide all users in a

particular group with a set of cryptographic ‘keys’. A

public key available to anyone in the group and there is

a private key which must be kept secret and only used by

the entity to which it belongs. The keys are typically used

for tasks such as decryption or for the creation of digital


Diskettes were originally used to store tax payers’

digital certificates

Digital certificate registration

pre-printed slip

A print of a Digital Certificate

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