OECD Publishes Report on Tax Administration Digitalization and Digital Transformation Initiatives

On June 17, the report of the Organization for Economic Co-operation and Development named “Tax Administration Digitalisation and Digital Transformation Initiatives” was published. It provides the analysis of technological tools and digitalization solutions implemented by the 54 members of the OECD Forum on Tax Administration (FTA). Results of the study offer the following conclusions:

1) Most taxpayers are already using a digital identity to access online services offered by the tax administration to successfully identify taxpayers and exchange tax data in real time.

2) Tax administrations are integrating tax interactions into third party systems, with more than 80% of tax administrations developing application programming interfaces (APIs), and over three quarters of them making their APIs publicly available for third party use.

3) Tax administrations increasingly receive data directly from taxpayer business systems and third parties, with 80% of administrations getting data directly from taxpayer business systems. Some data is already being sent to the administrations automatically from machine-to-machine without human involvement.

4) Many taxpayers enjoy an option full prefilling of tax returns through different technological solutions, such as electronic invoicing systems. 40% of tax administrations also reported being able to prefill VAT returns and around one quarter prefill CIT returns.

5) Artificial intelligence is being used by more than 70% of tax administrations to enhance effectiveness and efficiency. The most purpose of using AI in the detection of tax evasion and fraud, as well as risk assessment and virtual assistance.

6) Many administrations have started determining the skills required for a digital transformation. A quarter of administrations have identified the future skills required for a successful digital transformation for the whole administration, and 45% have done this for certain units of the administration.

7) Nearly 80% of administrations have developed a digital transformation strategy. Many administrations are increasingly developing digital transformation strategies that set out objectives and plan the timing and priority of their implementation.

The report focuses on such aspects of digital solutions and digital transformation reforms as:

• digital identity: almost all surveyed administrations now have digital identity systems in place for individuals and businesses;

• taxpayer touchpoints: administrations have expanded the range of digital services on offer, with more self-service for the user, 24/7 style of service, and less waiting times for assistance;

• data management: there is an increased role of data analytics and AI-driven automation, which can assist tax administrations in modernizing processes such as the pre-filling of tax returns, data sharing and withholding tax calculations; data confidentiality and security is also an important point of attention;

• tax rules: machine-readable tax rules in appropriate cases are adopted to enhance transparency and assurance, reduce errors, and improve taxpayer services, while also enabling quick and correct use of the applicable legislation and policy updates;

• new skill sets: within the framework of development of a new digital culture, these primarily include registration, tax payer services, returns and payment processing; audit, investigation and other verification; debt collection and dispute management;

• governance frameworks: embedding digital transformation into the core governance and processes of the tax administration is important to ensure long-term effect of tax reforms. This process unites multiple stakeholders, including private and public sectors domestically and internationally. To facilitate it, the OECD proposed tax administrations to use the Digital Transformation Maturity Model, so that they could track their progress in achieving digital maturity.

OECD Tax Administration Digitalisation and Digital Transformation Initiatives Report