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Tax Agencies Increasingly Deploying Technology To Improve Tax Take

by Ulrika Lomas,, Brussels

27 September 2019

The eighth edition of the OECD's Tax Administration Series published September 23 shows how tax administrations are increasingly moving to e-administration and using a range of technology tools, data sources, and analytics to increase tax compliance.

The Tax Administration Series, first published in 2004, provides wide-ranging comparative information on the performance of 58 advanced and emerging tax administrations, as well as an analysis of the major trends and developments in tax administration.

Its purpose is to assist administrations, governments, taxpayers, and other stakeholders in considering how and where improvements can be made in the efficiency and effectiveness of tax administration.

Together the 58 tax administrations participating in Tax Administration 2019 collected net annual revenues of EUR11.4 trillion while dealing with the tax affairs of around 810 million personal income tax and corporate taxpayers.

The report notes that there has been a significant shift towards e-administration, with increasing options for online filing of tax returns as well as online payments. On average, e-filing rates for personal income tax are now above 70 percent and those for corporate income tax are around 85 percent. Digital contact channels (online, email, digital assistance) continue to increase (for example, email contacts are up 20 percent) while traditional channels continue to decrease (in-person contacts are down 15 percent). More than 40 administrations are using or planning to use artificial intelligence.

Many tax administrations now report the use of behavioral insights and analytics to better understand how and why taxpayers act and to use these insights to design practical policies and interventions. More than 10 administrations are employing behavioral researchers and more than 35 administrations have data scientists.

Tax administrations are taking an increasingly proactive approach to compliance risk management, where possible seeking to intervene at earlier stages rather than after tax returns have been filed. In almost two-thirds of the administrations, formal co-operative compliance approaches for large taxpayers exist or are planned, the report says.

The report says the increasing availability and sharing of data is now allowing compliance by design approaches to cover a variety of sources of income, including through the prefilling of tax returns, which is done by close to 70 percent of the administrations covered by the report. The OECD noted that a number of tax administrations are now looking to introduce systemic approaches for other classes of taxpayer, including working with software developers on the integration of accounting systems and tax rules, and through the introduction of secure chains of information, for example through e-invoicing and the use of secure electronic cash registers. More than 20 administrations report having in place electronic invoice systems for tax purposes.

Commenting on the report, Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration said:

"Tax administrations, much like tax policy makers, are exposed to rapid change through the digitalization of the economy and the emergence of new business models and ways of working. The data and examples contained in Tax Administration 2019 show how the availability of new technologies, new data sources, and increasing international cooperation are providing new opportunities for tax administrations to better manage compliance, protect their tax base and reduce administrative burdens."

TAGS: compliance | tax | business | value added tax (VAT) | tax compliance | accounting | transfer pricing | Tax | BEPS

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