Tax Administration AI: The Holy Grail to Overcome Information Asymmetry in Tax Enforcement?
Tina Ehrke-Rabel, Barbara Gunacker-Slawitsch
Intertax Volume 53, Issue 2 (2025) pp. 128 – 140
Abstract
Liberal democracies are based on the concept of the free person who is a rational being capable of understanding their behaviour and taking responsibility for it. The state may only interfere with individual freedom when it has a legal basis, if it is necessary to safeguard the functioning of a democratic society. Therefore, in liberal democracies, citizens have duties to fulfil and responsibilities to bear. In return, they are not and must not be surveilled by the state. Tax enforcement is built upon this concept.
Tax administration Artificial Intelligence (AI) has the potential to change this concept. What is technically feasible is not necessarily appropriate for sustaining the fundamental values of a liberal society.
If society wants to uphold these values, any deployment of tax administration AI must be legally framed with clear rules on the origin of the data, the method of data processing, the aim of the data processing, and the possibility of human intervention. Additional legal prerequisites may be necessary depending on the purpose of the use of tax administration AI. If it is deployed in a mindful way, it is likely to increase both the efficiency and the equality of tax enforcement.
