Governmental financial management falls short in numerous aspects.
In a recent conference at the University of Public Administration and Finance Ludwigsburg, the transformative potential of Artificial Intelligence (AI) in tax administration was the focus of discussion. The event, attended by around 300 participants, highlighted key opportunities and challenges that lie ahead in the integration of AI into tax departments.
One significant project, the KI@FM, aims to address staff shortages and increasing tasks in the tax administration, including the testing of AI-assisted case selection and pattern recognition for combating Value-Added Tax (VAT) fraud.
The conference underscored several opportunities of using AI in tax administration. These include increased operating efficiency through significant reductions in time and costs for key tax processes, enhanced revenue collection by improving detection of non-compliance and optimizing collection strategies, and improved voluntary compliance by simplifying taxpayer obligations and enhancing perceptions of fairness and transparency.
Other benefits include better taxpayer services with faster, more personalized, and accessible responses, optimization of human talent by allowing staff to focus on complex tasks like strategic analysis rather than routine activities, evidence-based decision-making enabled by robust data analysis and more accurate forecasting, and reinforced equity by applying risk and selection criteria more objectively, provided AI systems are free from bias.
However, the implementation of AI in tax administration is not without its challenges. Data readiness and quality, bias and fairness concerns, ethical and legal issues, integration with existing systems, and complex contexts in low- and middle-income countries pose significant hurdles.
The discussions emphasized the need for a cautious approach to navigate these ethical, technical, and organizational challenges. Strategic partnerships, transparent design, and strong governance frameworks are essential to fully realize AI benefits without compromising taxpayer confidence and equity.
The Staatsanzeiger Academy offers an AI driver's license with three modules to help public institutions demonstrate safe AI handling, which will be required as of February 2025. Christoph Müller, likely a contact related to the AI driver's license at the Staatsanzeiger Academy, can be reached at 0711 66601-182 and c.mueller@our website.
In Baden-Württemberg, a tax chatbot has been developed to provide information on questions of income, wage, and inheritance tax, and is available to all federal states. North Rhine-Westphalia has been using AI for tax assessment for some time as the first federal state. Change management is considered a prerequisite for the widespread use of AI in administration, according to Gerhard.
Oliver Gerhard, a tax auditor and teacher at the University of Public Service in Bavaria, stated that not only legal, but also mental and psychological barriers need to be overcome before AI can be used throughout the administration. Katja Röser, a graduate of the University of Ludwigsburg, is working in the Ministry of Finance as a referent for IT matters in the tax administration.
The state-owned AI tool F13 is to be expanded into a comprehensive AI administration platform, providing full AI assistance. Iris Rauskala, the Rektorin of the university, welcomed the attendees. The use of AI in administration presents special challenges, one of which is the traceability of decision-making processes. Completing all three modules results in an official AI competence certificate, and new courses start in September. Each module can be booked individually.
In conclusion, the conference underscored the potential of AI to make tax systems smarter, faster, and fairer. However, a cautious and strategic approach is necessary to navigate ethical, technical, and organizational challenges and ensure that AI benefits are realized without compromising taxpayer confidence and equity.
- Artificial Intelligence (AI) is playing a significant role in education and self-development, as demonstrated by the KI@FM project, which aims to use AI in tax administration for more efficient tax processes and fraud detection.
- In the realm of career development, the Staatsanzeiger Academy offers an AI driver's license, consisting of three modules, to help public institutions handle AI responsibly, a requirement expected from February 2025.
- Politics and policy-and-legislation are also involved in the integration of AI, as evidenced by the use of an AI tax chatbot in Baden-Württemberg, and the extensive use of AI for tax assessment in North Rhine-Westphalia.
- General news surrounding AI in tax administration highlight the impact it has on general efficiency, revenue collection, and taxpayer services, as well as the challenges posed by data readiness, ethical concerns, and the need for strategic partnerships to ensure fair and transparent AI implementation.
