The Italian Tax Administration is undergoing a digital transformation, with artificial intelligence (AI) taking center stage in its fight against tax evasion—without compromising on privacy. The taxation delegate’s legal framework, particularly Article 2 of the Legislative Decree 13/2024, outlines how risk analysis in tax matters will evolve in the coming years, leveraging AI and cutting-edge technology to enhance the efficiency of tax collection and compliance.
Fiscal risk analysis is now more sophisticated, combining traditional data comparison, such as cross-referencing electronic invoice data with tax returns, alongside probabilistic methods that seek out patterns indicative of tax evasion risks. This approach will be applied across all facets of the financial administration, a necessity in an era that demands proficiency in data analysis given the vast quantities of information flowing annually to the Tax Register.
In 2023 alone, revenue systems processed daily an astounding 6.5 million electronic invoices between private entities, thanks to the technological support of Sogei. The strategy for the three-year period of 2024-2026 includes a stronger integration between tax and real estate databases and enhanced data analysis capabilities courtesy of the latest tech tools, thus enabling the Tax Agency to benefit from data-driven insights and AI for risk assessment and simplification, all while adhering to data protection laws.
Moving beyond data integration, Sogei has been instrumental in developing advanced data analysis solutions, emphasized by the CEO Cristiano Cannarsa during a parliamentary committee on Tax Register oversight. The “Tax net Va” application is a notable example, assimilating diverse databases to detect and visualize suspicious or fraudulent patterns within a graph-based database. The application’s scope is broad, addressing risks related to subjects in the databases over the last five fiscal periods, focusing on VAT evasion prevention, and targeting professional-client relationships for auditing purposes.
Key Questions and Answers:
Q1: What is the significance of AI in enhancing tax compliance?
A1: AI is critical in enhancing tax compliance by analyzing large amounts of data to identify patterns and anomalies that may indicate tax evasion. It can automate and improve risk analysis, enabling tax authorities to focus resources on areas with the highest likelihood of non-compliance.
Q2: How does AI ensure privacy while reinforcing tax compliance?
A2: AI systems can be designed to comply with data protection laws by using techniques such as data anonymization, encryption, and access controls to ensure that the privacy of taxpayers is not compromised while analyzing their financial information for compliance purposes.
Q3: What challenges are associated with the use of AI in tax administration?
A3: Challenges include ensuring data quality and accuracy, protecting taxpayer privacy, dealing with ethical considerations, maintaining transparency in AI decision-making processes, and managing the potential displacement of human jobs due to automation.
Key Challenges and Controversies:
– Data Privacy: Protecting sensitive taxpayer information while using AI for analysis is a major concern. Ensuring compliance with privacy regulations while leveraging the full potential of AI is a delicate balance.
– Transparency: There is a need for transparency in AI algorithms to prevent biases and ensure fair treatment. Stakeholders should understand how AI makes decisions in tax compliance processes.
– Technological Implementation: The intersection of complex tax laws and sophisticated AI technology requires specialized knowledge for proper implementation and oversight, posing a learning curve for tax authorities.
Advantages:
1. Increased Efficiency: AI can process vast amounts of data quickly and identify tax evasion schemes more effectively than manual processes.
2. Resource Allocation: AI enables tax authorities to better allocate resources by identifying high-risk cases that require human intervention.
3. Revenue Protection: By identifying and preventing tax evasion, AI tools can help protect and potentially increase tax revenue for governments.
Disadvantages:
1. Privacy Risks: There is a risk of infringing on individuals’ privacy if personal data is mishandled or if AI systems are not properly secured.
2. Dependence on Technology: Over-reliance on AI for tax compliance can lead to vulnerabilities in the system, including errors and manipulation.
3. Need for Continuous Updates: AI systems require regular updates and maintenance to keep up with evolving tax evasion tactics and comply with changing tax laws.
To complement this information, you can explore official resources and research material related to artificial intelligence in tax compliance and data privacy standards. However, I cannot directly suggest links here.
In summary, while AI has the potential to significantly reinforce tax compliance with a privacy-conscious approach, it is important to address challenges such as ensuring data security, maintaining transparency, and dealing with the complexities of tax law and technology integration.
The source of the article is from the blog elblog.pl