AI Revolutionizes Tax Audits
Greek authorities are embracing advanced technology in their ongoing fight against tax evasion. An innovative algorithm is now at the forefront of selecting taxpayer audits, revolutionizing the way tax compliance is enforced. The algorithm considers various factors, such as employee numbers at audit centers in Athens and Thessaloniki, along with the nature and classification of cases to determine which should be scrutinized.
Audit processes have evolved with technology, as auditors utilize laptops and portable scanners to verify the authenticity of receipts on-site. For office-based reviews, indirect audit techniques come into play, leveraging data such as bank deposits, cash expenses, and the taxpayer’s liquidity to ascertain undeclared income.
The latest tax law in Greece has broadened the scope of indirect audit techniques to include several new scenarios. Audits are intensified when a business reports losses for three consecutive years without clear financial backing, or when there’s a significant discrepancy between reported purchases, sales, and inventory. Auditors also focus on cases where the gross profit ratio is inconsistent with the supporting documents, and when enterprises fail to submit requested information after two formal requests.
2024 Audit Roadmap
According to the action plan released by the Independent Authority for Public Revenue (AADE), an ambitious target has been set for the current year. A total of 27,500 full and partial tax audits are to be carried out. Out of these, a significant 70% will target fiscal years within the last five, with at least 75% focusing primarily on the past three years, after the income tax declaration deadline has passed. A risk analysis system and automated scoring model aid in prioritizing these inspections.
Furthermore, the authority has planned for 25,400 on-the-spot checks to ensure proper tax compliance, 2,500 reviews for the verification of non-annual tax obligations, 16,600 targeted inspections by special investigation units, and at least 885 in-depth tax evasion probes.
Artificial Intelligence in Combating Tax Evasion
The use of AI in detecting and preventing tax evasion in Greece is a part of a global trend where governments leverage technology to enhance tax enforcement and compliance. The AI algorithm incorporates a risk analysis system and an automated scoring model which greatly optimizes the selection process for audits.
Key Questions and Answers:
1. How does AI help in the fight against tax evasion?
AI aids by analyzing vast amounts of data to identify inconsistencies and patterns that suggest possible tax evasion, allowing for targeted audits and more efficient use of resources.
2. What factors does the AI algorithm consider for selecting audits?
The algorithm considers metrics such as the number of employees, business classification, financial transactions, profitability, and compliance history to determine the risk level of each taxpayer.
Key Challenges and Controversies:
One of the main challenges is the balance between efficient tax enforcement and ensuring taxpayer privacy and rights. AI systems must be transparent and fair in their operation to maintain public trust.
Another challenge is keeping the AI algorithms current and adaptable to new methods of tax evasion. As tax evaders evolve their methods, the algorithms must evolve to detect new patterns.
Advantages:
– Increased efficiency and effectiveness in audit selection.
– Better allocation of audit resources on high-risk cases.
– Potential to reduce the tax evasion gap, leading to increased public revenue.
Disadvantages:
– Potential for bias in the AI algorithm, leading to unfair targeting.
– Complexity in understanding and challenging AI decisions for taxpayers.
– Risk of violating taxpayer privacy if data is not handled securely.
Use of AI and other advanced technologies often require significant upfront investment both in technology and in training personnel to use these tools effectively.
Related Links:
For more information on the use of AI in tax enforcement and compliance, you can explore the main websites of relevant organizations such as the European Commission or the Organisation for Economic Co-operation and Development (OECD), which provide insight into how different nations are adopting such technologies.
The source of the article is from the blog oinegro.com.br