AI-driven Tax Administration: A Comprehensive Literature Review
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Abstract
Described as the fourth industrial revolution, artificial intelligence (AI) has evolved rapidly with important implications for how individuals, businesses and tax administrators leverage its vast capabilities to address and manage tax-related issues. Although in its infancy, AI has surfaced as a promising tool for strengthening the roles of tax practitioners in tax fraud detection. The potential of AI services within the South African taxation arena includes enhancing the efficacy of tax administration and taxation revenue collections. A qualitative content analysis of the extant literature revealed the possibilities of AI usage in South Africa whilst paying attention to the factors surrounding the current tax administration. This study analysed contemporary research studies on the effectiveness of adopting AI technology, for optimal tax administration. An in-depth content analysis of existing literature undertaken between 2018 to 2024 brought to the fore the current realities of the South African context. The analysis revealed that although AI systems were effective in automating tax returns processes, audit triaging, and risk targeting specific taxpayers, their adoption within the South African taxation administration system, was hampered by several issues that characterise the South African landscape. These included a lack of knowledge and skills, legacy systems, poor infrastructure, an unstable digital environment, and data privacy constraints. Therefore, strategic investments involving further AI upgrading of legacy systems, partnering with international organisations and further regulation become necessary to leverage the advantages offered by AI-driven tax administration systems.
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References
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