With the term Tax Administration, we refer to the digital transformation of the Tax Administration, according to which the tax procedures become more seamless, fully automated, without the intervention of a human factor, with the use of digital systems, which will be interconnected and be supported the continuous, secure, and real-time transmission of useful information from taxpayers (individuals and businesses) to the Tax Administration.

With this manner, the Tax Administrations internationally will be able to deal more effectively with :

• the tax gap maintained until now,
• the collection of significant amounts from confirmed but uncollectible debts,
• will achieve greater tax compliance for taxpayers.

The successful completion of this project requires :

• the good cooperation of the Tax Administrations with other government agencies,
• with the private sector,
• and also, with the Tax Administrations of other countries.

A key tool in the implementation of the digital transformation is the digital identity. the digital identity is used in any country where the person transacts.

The Digital Identity will ensure the connection of each transaction, in any country, with the persons who carried it out.

The digital identity will be based on technical specifications that the administrations of the countries will first agree with each other and will be unique for each taxpayer. Thus, the Tax Administrations will be able to determine the worldwide income of the taxpayer and correctly calculate his tax obligations, taking into account the applicable agreements to avoid double taxation

According to the OECD, we are in the era where digitization is combined with traditional media. The transition to full digitization will enable tax forecasting and real-time taxation.

Advanced Tools for Better Tax Administration

Significant Tools for Tax Audit

SNA : It is used by Tax Administrations of several countries (eg Netherlands, Ireland) to detect VAT carousel fraud. In particular, it processes data to identify links between persons (for example, through company executives, bank accounts or telephone numbers) and produces scenarios of relationships - interconnections between them. Until now, it was impossible to detect.

It is used by Tax Administrations of several countries (eg Netherlands, Ireland) to detect VAT carousel fraud. In particular, it processes data to identify links between persons (for example, through company executives, bank accounts or telephone numbers) and produces scenarios of relationships - interconnections between them. Until now it was impossible to detect. There are different tools to detect different errors or types of fraud even for the same type of tax. The same tool cannot detect a fraud and determine the reason the taxpayer may be claiming an unreasonably high amount of VAT for refund.

STIR : is implemented in Poland and aims to automatically detect unusual transactions in real time by collecting data from bank accounts, such as daily transaction statements, sender and receiver identification details, detailed amounts, transaction description and even IP addresses from which account holders connect to e-banking.

VeRa tool : the VeRa algorithm is used in Italy, and is a tool to fight tax evasion. How? it compares tax returns, earnings, assets, and bank accounts looking for differences. Then, in those cases that the algorithm classifies as high-tax risk, taxpayers receive a notice asking them to explain the differences.

Significant Tools for Tax Compliance

• Debt management tools

incorrect income tax deductions;

detection of undeclared income

they compare the taxable income of a taxpayer, with the corresponding incomes of other taxpayers, belonging to the same classified category based on specific parameters, and, if is not in the median, it has a high chance of being tax audited.

• Text Mining Process Tool

with which they assess which taxpayers may be unable to pay, so that they can be reminded in time by SMS of the obligation to pay their debts. Furthermore, Artificial Intelligence is also used to enhance the service of taxpayers.

identifies repeated keywords and phrases between different messages, and prioritizes the issues that most concerned taxpayers, helping the Administration to make more targeted interventions with clarifications on laws, circulars, etc.

Advantages of using Artificial Intelligence tools in tax audits the use of artificial intelligence tools in tax audits will help:

1. to detect tax fraud

2. to taxpayer compliance

3. to fair taxation in real time

4. simpler interpretation of tax laws

5. in predictive analysis for forecasting revenue.

The firm

JPA Audit Greece (Auditask Certified Public Accountants SA) is a company of Certified Public Accountants, a member of the Hellenic Auditor’s Association and of the Accounting Standardization and Auditing Committee (ELTE). JPA AUDIT GREECE provides a number of services e.g. audit, tax and consulting to local and international organizations, applying auditing techniques which are in strict compliance with international auditing standards.

If you need details from this article you can contact:

Maria Varthaliti                                                                                               mvarthaliti@jpa.gr