Source: IMF

The article from IMF explores how artificial intelligence is revolutionizing tax administration, benefiting both tax authorities and taxpayers. Governments worldwide are leveraging AI to enhance tax collection, detect fraud, and improve compliance, while individuals and businesses are using AI-powered tools to streamline tax reporting and ensure accuracy.

One of the key advantages of AI in taxation is its ability to analyze vast amounts of financial data quickly and accurately. Machine learning algorithms can identify suspicious transactions, flag inconsistencies, and predict tax fraud patterns, making enforcement more efficient. At the same time, AI-driven tax assistants help taxpayers navigate complex tax codes, reducing errors and simplifying filing processes.

The article highlights real-world examples where AI has been successfully integrated into tax administration, such as automated audits, predictive risk assessments, and digital tax reporting. However, it also notes the challenges, including concerns over data privacy, potential biases in AI decision-making, and the need for transparent algorithms to maintain public trust.

Governments are encouraged to adopt AI in tax administration cautiously, ensuring that human oversight remains in place to prevent errors and misuse. The IMF suggests that AI’s role in taxation will continue to expand, with future developments likely to focus on real-time tax compliance monitoring and enhanced fraud detection systems.