Listen to the audio version of this article below.
Artificial intelligence (AI) is redefining how tax administrations collect revenue, ensure compliance, and deliver services to citizens. Once limited to experimental projects, AI is now an integral part of modern tax ecosystems – enhancing efficiency, improving fairness, and strengthening public trust.
For decades, tax authorities have relied on automation and analytics to support audits and identify non-compliance. Today, with advances in machine learning and predictive analytics, these capabilities have evolved into intelligent systems that can process large datasets, recognize complex patterns, and assist in real-time decision-making.
According to the Organisation for Economic Co-operation and Development (OECD), tax administrations are increasingly integrating AI across their operations. The OECD Inventory of Tax Technology Initiatives (ITTI) shows that 29 of 38 OECD members currently use AI in some form. The most common applications are detecting tax evasion and fraud, assisting administrative decision-making, and improving taxpayer services.
How AI is Being Used in Tax Administration
The OECD ITTI survey provides a clear picture of how AI is reshaping tax operations globally. Most implementations focus on fraud detection, risk scoring, and taxpayer assistance. These use cases show that AI is no longer just a pilot concept – it is becoming a practical, operational asset.
As noted in the OECD report Governing with Artificial Intelligence: The State of Play and Way Forward in Core Government Functions, tax administrations are “well placed to adopt AI” because data collection and analysis lie at the heart of their operations. Years of experience with rules-based systems have prepared authorities to move toward more sophisticated, data-driven approaches that improve both compliance and taxpayer experience.
Why AI Matters for Tax Administrations
AI supports three fundamental objectives that define modern, effective tax systems:
- Improving compliance and combating fraud: AI uncovers hidden links between taxpayers, assets, and transactions. For example, Greece’s Independent Authority for Public Revenue (IAPR) uses AI to detect compliance risks in real time, automate audit procedures, and prevent large-scale refund fraud.
- Enhancing operational efficiency: Austria’s Predictive Analytics Competence Centre (PACC) analyzed 6.5 million tax and customs cases in 2023, recovering EUR 185 million in additional revenue through AI-assisted fraud detection.
- Delivering better taxpayer services: Singapore’s Inland Revenue Authority (IRAS) uses a chatbot powered by large language models to provide personalized assistance and process payments, saving more than 11,600 taxpayer hours annually.
These advances show that AI enhances efficiency while reinforcing fairness and transparency – strengthening the trust on which voluntary compliance depends.
Global Examples of AI in Action
AI is already demonstrating measurable results in several OECD member states:
- France: The Foncier Innovant project combines AI and aerial imagery to detect undeclared property developments such as new buildings or swimming pools, ensuring equitable property taxation.
- Brazil: The AI Litigation Project uses supervised machine learning to categorize tax appeal cases efficiently, reducing backlog and improving decision times.
- Australia: The Taxation Office (ATO) employs AI-powered pre-filled returns and anomaly detection to prompt taxpayers to correct potential errors, protecting AUD 79 million in revenue during 2023-24.
Each case highlights AI’s dual potential – improving compliance and delivering more responsive, citizen-oriented tax services.
Transforming Insight into Action
AI is not just a technological upgrade; it is a strategic tool for fairer, more effective tax systems. The OECD’s Tax Administration 3.0 Framework envisions a digital ecosystem where data integrity, automation, and trust underpin every process.
The challenge for tax authorities now lies in scaling successful pilots and embedding AI responsibly within governance frameworks. Done right, AI will enable smarter decision-making, faster compliance, and deeper citizen trust in public finance.
The role of AI in modern tax administration is ultimately about more than efficiency – it is about building fair, transparent, and resilient tax systems for the digital era.
How NRD Companies Contributes to Responsible AI Adoption
As governments and tax administrations move toward AI-driven operations, NRD Companies plays a key role in helping them build the foundations required for responsible innovation. With extensive experience in digital transformation and e-governance, the company supports institutions in:
- Modernizing tax administration platforms to create secure, scalable systems that can support future AI-based compliance and analytics initiatives.
- Establishing data governance frameworks aligned with OECD and EU standards to ensure data quality, consistency, and transparency.
- Developing citizen-centric digital tools that enhance accessibility, streamline processes, and foster voluntary compliance.
- Building institutional capacity through knowledge transfer, skills development, and strategic advisory support.
Through these initiatives, NRD Companies helps tax administrations strengthen their digital ecosystems – creating the solid technical and institutional base needed to adopt AI responsibly in the future.
AI is already transforming tax administration – explore how your institution can prepare for responsible innovation.
Contact us
Start the conversation
AI is already transforming tax administration – explore how your institution can prepare for responsible innovation.
Thank you for your message!
Our team will review it and get back to you shortly. For urgent questions, you can reach us at connect@nrdcompanies.com.
