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Tax rule management and application

 

At the moment: Primarily undertaken within tax administration-driven or supported processes

Currently tax rule management and application is primarily undertaken within tax administration-driven or supported processes. This usually involves a number of steps including:

  • the provision of guidance on tax law compliance and deadlines (through a variety of channels, including websites, direct communications, tax agents, etc.);
  • the use of forms and e-forms which require the input by the taxpayer of specific tax relevant information (which may be for registration purposes, tax return filing, etc.); and
  • the finalisation of the relevant process within the administration (for example, the registration of the taxpayer, computation of the final tax liability, acceptance of payments, etc.).

 

Going forward: Elements of tax processing will take place within taxpayers’ natural systems

The digital transformation of tax administrations will affect how tax rule management is conducted. More and more, tax administrations will need to consider providing more detail on the technical rules and information needed for elements of tax processing to take place within taxpayers’ natural systems. A current example of this is the embedding of tax rules in the payroll systems used by employers for calculating the net pay and withheld tax for salaried employees under pay-as-you-earn arrangements. Under this approach the data largely remains in taxpayer systems with assurance processes done on the system itself rather than the processing of the underlying data by the administration.

 

Tax rule management and application

Note: To understand fully the information included in this map, users are advised to look at the source data tables and the original survey question as some of the self-reported data may not give the full picture and may need to be looked at in the wider context of the survey.

Sources: Tables TRM1, TRM2, TRM3 and TRM4

 

Main uses of artificial intelligence in tax administrations

Note: To understand fully the information included in this map, users are advised to look at the source data tables and the original survey question as some of the self-reported data may not give the full picture and may need to be looked at in the wider context of the survey.

Source: Table TRM3

 

Data tables

The following tables provide an overview of how tax administrations use technology for tax rule management. This includes looking at the translation of tax rules into machine-readable format, the development of assurance frameworks that allows third parties to incorporate tax rules in their software packages, and the use of artificial intelligence and other innovations in this area. 

Machine readable tax law / rules and automated (de‑)registration

This table shows whether jurisdiction have translated tax law / rules into machine-readable format that will enable the law / rules to be incorporated in the relevant software used by taxpayers. It further illustrates whether tax administrations automatically register / deregister taxpayers based on data received from third parties.

Assurance framework

This table provides details regarding the assurance frameworks developed by tax administrations that allows third parties to incorporate tax rules in their software packages and deliver outputs based on those rules that are accepted by the tax administration.

Artificial intelligence

This table shows if and how tax administrations use artificial intelligence as part of their operations, including the main use cases.

Innovation

This table holds information about a number of innovative approaches taken by administrations, including distributed ledger technology.

 

 

Case studies

  • Machine-readable tax law / rules
    • Netherlands: In the OECD report Tax Administration 2021, the Netherlands Tax Administration describes a new management environment for the creation, testing and management of decision rules called Agile Law Execution Factory (ALEF). In ALEF, rules can be specified in a controlled natural language, called RegelSpraak, and then be automatically transformed into a decision service for automated decision making. RegelSpraak rules are readable by all and technology independent. Follow the link to a video explaining ALEF: https://youtu.be/yo_tCMYT0H0.

 

Further information

Tax Administration 3.0: The Digital Transformation of Tax Administration

 Launching a digital tax administration transformation                                                                                                

Tax Administration Series: Comparative Information on OECD and Other Advanced and Emerging Economies

 

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