Creating different schemas for various tax types while storing all data

in one place can be a strategic approach to managing the complexity

and diversity of tax-related information within an organization like
ZATCA. This method combines the benefits of centralized data storage
with the flexibility and specificity provided by distinct schemas for
each tax type. Here’s a detailed explanation and justification for this
approach:

Different Schemas for Different Tax Types:

1. Tailored Data Structures: Each tax type (e.g., VAT, CIT/Zakat,

Excise Tax, WHT, CGT) has unique data requirements, forms, and
reporting standards. Separate schemas allow for the creation of data
structures that are precisely tailored to the specific requirements of
each tax type, ensuring that all necessary information is accurately
captured and managed.
2. Simplified Compliance: Tax regulations frequently change, and
different taxes often have different regulatory updates. Having
separate schemas allows for easier adaptation to regulatory changes
specific to each tax type, simplifying compliance management.
3. Enhanced Data Integrity: By separating data into different
schemas based on tax type, it’s easier to enforce data integrity and
validation rules specific to the information required for each type of
tax return, reducing the risk of errors.
4. Improved Data Access and Security: Different tax types may
have different access control and security requirements. Separate
schemas can facilitate more granular access control, ensuring that
users have access only to the data relevant to their role and
responsibilities.

Centralized Data Storage:

1. Efficiency in Data Management: Centralized storage of all tax-

related data, despite the use of separate schemas, allows for more
efficient data management practices, including backup, recovery, and
archiving.
2. Unified Analytics and Reporting: Having all tax data in one
place, even if organized into different schemas, simplifies analytics
and reporting. It enables the generation of comprehensive insights
across all tax types and facilitates the creation of consolidated
reports.
3. Data Sharing and Integration: Centralized storage makes it
easier to share data between different departments and integrate with
other systems (e.g., accounting, ERP). Data that is common across
different tax types, such as taxpayer information or financial details,
can be stored once and referenced across schemas, reducing
redundancy.

Data Differentiation Between Tax Return Types:

• Taxable Entities and Transactions: Different taxes apply to

different entities and transactions. For example, VAT applies to sales
and services, while CIT applies to corporate profits.
• Calculation Rules: Each tax type has unique calculation rules,
such as tax rates, deductions, and exemptions.
• Reporting Requirements: The information required in tax
returns varies significantly. For example, Excise Tax returns might
require detailed information on specific goods, while VAT returns focus
on sales and purchases.
• Payment and Refund Processes: The processes for making
payments and claiming refunds differ between tax types, necessitating
different data fields and workflows.

Conclusion and Best Option Justification:

Adopting a hybrid approach that utilizes separate schemas for each

tax type within a centralized data storage system presents the best
option for managing tax-related data. It combines the flexibility and
specificity needed to accommodate the unique aspects of each tax
type with the efficiency and cohesion of centralized data management.
This approach supports tailored data handling, simplifies compliance
and reporting, and enhances data integrity and security across the
board.