Digital tax administration has come far in recent years. Indeed, the electronic filing of tax returns is now more than three decades old in many jurisdictions. In some nations, tax returns are now automatically pre-populated for taxpayers to approve, taking in information from banks, brokers and other third parties, almost fully automating a process that for many previously represented a burdensome review of physical documents.
Although not the initial focus of attention, corporate business taxes are now experiencing their time in the spotlight. “We clearly started this journey with personal taxpayers. I think the next wave will be the business side,”1 says Hans Christian Holte, Commissioner of Norway’s tax authority and Chair of the Organisation for Economic Co-operation and Development’s (OECD) Forum on Tax Administration, a collection of more than 50 tax commissioners who regularly share ideas and insights with one another.
So what does digital tax administration look like, and what exactly are revenue authorities trying to achieve?
Tax authorities have many reasons for their journeys into digitalization. The first was out of necessity — only by applying digital techniques could tax authorities start to address the shadow economy. Second was efficiency, as at a broader level all government departments have found that they need to do more with less. Shrinking internal budgets, while still under pressure to deliver revenue, was a key driver.
Chiefly, collecting more tax revenue (and earlier) heads the list, and data matching and advanced data analytics can be used not only to identify tax fraud and evasion, but also to tackle what they consider to be aggressive tax planning.