Siti Muinah
Hong Kong’s tax chief has issued a formal apology following a critical report by the government’s watchdog, the Office of the Ombudsman, which revealed that over 33,000 taxpayers encountered significant issues with the electronic tax filing platform, eTAX. These individuals failed to successfully submit their tax returns, with some facing penalties due to what the Ombudsman described as "unclear" wording and interface design within the system. The revelations have raised concerns about the user-friendliness and reliability of digital government services, particularly when they impact citizens’ financial obligations.
Commissioner of Inland Revenue, Benjamin Chan, announced on Tuesday that the Inland Revenue Department (IRD) would arrange refunds or cancel penalties for approximately 800 taxpayers affected during the 2025-26 tax year. This proactive measure comes in response to the Ombudsman’s findings, which pinpointed a critical flaw in the eTAX system’s integration with the digital identity platform, iAM Smart. The Ombudsman’s investigation, launched after receiving numerous complaints, highlighted a user experience that led many to believe their tax submissions were complete when, in fact, they remained in an incomplete state.
The Ombudsman’s Investigation and Findings
The Office of the Ombudsman’s report, released on Monday, detailed the findings of a direct investigation into the unsuccessful delivery of electronic tax returns to the IRD. The investigation was initiated due to a surge in complaints from the public regarding the eTAX platform. Ombudsman Jack Chan stated that the core of the problem lay in the ambiguous instructions and interface design presented to users during the eTAX submission and digital signature process.
Between May 2025 and January 2026, a substantial number of taxpayers, exceeding 33,000, attempted to file their tax returns via eTAX using a digital signature completed with iAM Smart. However, the IRD did not receive these submissions. The Ombudsman’s report clarified that many users, after successfully signing their documents using iAM Smart, mistakenly assumed the process was finished. The system, however, required users to return to the eTAX platform and navigate to a confirmation page to finalize the submission. The lack of clear guidance at this crucial juncture led to the widespread failure to complete the filing process.
Timeline of the Issue and Response
The period under scrutiny for the eTAX system failures spans from May 2025 to January 2026. During these months, the flawed interface design prevented thousands of tax returns from being officially received by the IRD.
- May 2025 – January 2026: Over 33,000 taxpayers attempt to file their returns via eTAX using iAM Smart, but due to unclear instructions, their submissions are not completed.
- Post-January 2026: The IRD begins to identify these incomplete submissions, leading to the issuance of penalties for late filing in some cases.
- Undisclosed Date (prior to Monday): The Office of the Ombudsman receives multiple public complaints regarding unsuccessful eTAX submissions.
- Monday (Date of report release): The Office of the Ombudsman releases its report, detailing the investigation and findings.
- Tuesday (Day after report release): Commissioner of Inland Revenue Benjamin Chan issues an apology and announces remedial actions.
The IRD’s Commissioner, Benjamin Chan, addressed the issue on the radio program "On a Clear Day" on Tuesday. He confirmed that the IRD would be taking steps to rectify the situation for those affected. "My department will arrange refunds or cancel the penalties issued to some 800 taxpayers in the 2025-26 tax year," Chan stated, underscoring the department’s commitment to addressing the fallout.
He also revealed that the two electronic platforms, eTAX and iAM Smart, have undergone a revamp in the current year. The updated iAM Smart system is designed to provide explicit prompts, reminding users to return to eTAX to complete their tax returns. The eTAX platform itself will now feature a clearer indication of whether a filing has been successfully completed, aiming to prevent future misunderstandings.
Impact on Taxpayers and Remedial Actions
The failure to file tax returns on time can result in financial penalties. In the case of the 33,000 affected taxpayers, approximately 26,000 have since rectified their filings. However, around 800 individuals were issued with penalties. The Commissioner confirmed that these penalties would be addressed.
"Among the 33,000 taxpayers who failed to file their tax returns via eTAX last year, about 26,000 had corrected their filings afterwards. Only around 800 received a ticket for a fine," Benjamin Chan elaborated.
A Personal Account from an Affected Taxpayer
Adding a human dimension to the systemic issue, Luk Che-chung, a former chief executive of the Hospital Authority’s Hong Kong East Cluster, came forward to share his experience. Luk revealed that he was among those who received a HK$600 penalty for the late filing of his tax return.
Luk expressed his surprise and initial confusion when the IRD notified him of his failure to file. Following advice from friends familiar with tax matters, he promptly paid the penalty. Initially, he attributed the oversight to his own memory lapses, particularly as he is over 60 years old. "I am over 60 years old, and I thought my memory was failing. I didn’t even know that I hadn’t filed my taxes after signing," he recounted in Cantonese.
The Ombudsman’s investigation brought him a sense of relief, as it validated his suspicion that the issue was not solely a personal failing but a consequence of a flawed system. Luk urged the authorities to thoroughly review the matter to prevent similar incidents from recurring, emphasizing the need for user-friendly and transparent digital government services.
Broader Implications and Systemic Improvements
The eTAX and iAM Smart integration issue highlights a broader challenge for governments worldwide: ensuring that digital transformation of public services is accompanied by robust user experience design and clear communication. The reliance on digital signatures and online platforms for essential civic duties like tax filing requires a high degree of reliability and intuitive operation.
The IRD’s apology and the subsequent system revamp are crucial steps in rebuilding public trust. The department’s commitment to refunds and penalty cancellations for those unfairly penalized demonstrates a willingness to take responsibility. However, the incident also serves as a stark reminder of the potential pitfalls in digital governance.
Key areas for consideration moving forward include:
- User Interface (UI) and User Experience (UX) Design: Government platforms must be rigorously tested for clarity and ease of use, especially for diverse user demographics. This includes employing plain language and intuitive navigation.
- Public Consultation and Feedback Mechanisms: Implementing more effective channels for user feedback before and after system launches can help identify and address issues proactively.
- Digital Literacy Support: While Hong Kong has a high rate of digital adoption, providing accessible support and guidance for those less digitally savvy remains important.
- Inter-agency Collaboration: The seamless integration of different government digital platforms, such as eTAX and iAM Smart, requires meticulous planning and execution to ensure a unified and understandable user journey.
- Transparency and Accountability: Swift and transparent communication from government departments when errors occur is vital for maintaining public confidence. The Ombudsman’s role in investigating such issues is instrumental in this regard.
The failure of over 33,000 taxpayers to submit their returns due to system design flaws is a significant issue that has prompted an official apology and system upgrades. As Hong Kong continues to embrace digital solutions for public services, ensuring that these systems are not only efficient but also comprehensible and accessible to all citizens remains paramount. The IRD’s response, while a step in the right direction, underscores the ongoing need for vigilance and continuous improvement in the delivery of digital government services.
Lina Irawan
