This blog was originally published on the OECD blog. It was authored by Oliver Petzold, Fiona May and Peter Green. It has been cross-posted here to centralise relevant AI-related blogs on the OECD.AI Policy Observatory.

When kids are asked what they want to be in the future, being a tax administrator does not usually make the list. Many, though, would love to join a tech company and work with those cool technology tools. And in reality, that is increasingly what tax administrations are becoming.

People may not know, but tax administrations are transforming. They are at the forefront of innovation in the public sector. The rooms with shelves full of paper have become data centres. Artificial intelligence is being used to assist citizens, and investigation teams are using robotic process automation and machine learning to uncover hidden assets.

Welcome to the tech-enabled tax administration of the future!

When the OECD’s Forum on Tax Administration (FTA) vision for the future of tax administration – Tax Administration 3.0  – was published in 2020, many tax administrations had already embarked on a digital transformation journey, introducing new digital initiatives and innovations to support tax compliance and reduce burdens. Since then, many more have followed, fully embracing the long-term vision and working to make tax become a more seamless experience for citizens and businesses.

Containing a wealth of data, Tax Administration Digitalisation and Digital Transformation Initiatives takes a closer look at the extent and progress that the 54 FTA member tax administrations have made in their digitalisation and digital transformation journeys. For example, it shows that:

• Most taxpayers are already using a secure digital identity to access tax administration online services. Like the online banking systems many use, this provides the certainty that allows systems to interact so that data can be exchanged in real-time.
• This is allowing administrations to integrate tax interactions into third-party systems, with more than 80% of tax administrations developing application programming interfaces (APIs).
• Many taxpayers already enjoy a seamless experience through full prefilling of tax returns, drastically reducing burdens. Around 60% of administrations are already in a position to offer the complete prefilling of returns for many PIT taxpayers. Thanks to the availability of technology solutions such as electronic invoicing systems, close to 40% of tax administrations also report now being able to prefill VAT returns and around one quarter prefill CIT returns.
• Around 85% of administrations indicated that they have the required people, skills and infrastructure to analyse big data. Those that do use it, for example, to improve compliance (89%), identify trends (79%) and forecast revenue (64%). Slightly more than half of tax administrations also reported using analytics for real-time tax fraud detection and prevention.
• Artificial intelligence (AI) is being used by more than 70% of tax administrations to enhance effectiveness and efficiency within the administration, for example, on compliance management, and to improve taxpayer services. The figure below shows the most common use cases. 

All of this is just a glimpse at the data that the new OECD report Tax Administration Digitalisation and Digital Transformation Initiatives holds. Take a closer look to see how tax administrations are digitally transforming, to make the administration of the tax system a more seamless and frictionless experience for all. Follow one of the most interesting developments in public agencies over the coming years.

More on the data

In November 2024, the OECD published its new version of the Inventory of Tax Technology Initiatives. The inventory, which contains data on technology tools and digitalisation solutions implemented by more than 100 tax administrations globally, is the result of a global partnership. It has been put together with the assistance of the ADB, ATAF, CATA, CIAT, CREDAF, IMF, IOTA, PITAA and SGATAR. It is managed by the OECD FTA Secretariat and can be found through the following link: https://oe.cd/itti.

The report Tax Administration Digitalisation and Digital Transformation Initiatives takes a closer look at the data from the 54 tax administrations that are members of the FTA. The data has not been reviewed or validated by the OECD or any of the partner organisations. As a result, all data should be considered as self-reported by the administrations concerned.

The FTA brings together Commissioners and tax administration officials from OECD and non-OECD countries. For more information on the FTA, its publications and databases, visit https://oe.cd/fta.

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