This article addresses
the challenges faced by tax administrations, organizations, and policymakers
arising from the use of Artificial Intelligence (AI). Several organizations
such as the OECD, International Monetary Fund (IMF), Asian Development Bank
(ADB), and the European Union (EU) have defined AI, however, finding a single
definition is difficult. Therefore, it or its usage will be defined in accordance
with the work of the organizations and taking into account the different
sectors and stakeholders to which it will apply.
Despite the lack of a
single definition, using AI affords opportunities for tax administrations to
improve compliance and communication with taxpayers. For instance, its
multifaceted use in tax administration includes better taxpayer services,
profiling, assessing risk of fraud, and other functions. However, there are
challenges related to the ethical and legal dimensions associated with the
utilization of AI.
Considering the above,
the main issue explored in this article is how taxpayers’ rights are influenced
by the integration of AI in tax administrations. To address this question, this
article is structured as follows. The first section provides an overview of the
topic of AI and taxation outlining AI definitions, its unique characteristics,
and its governance in taxation. Through exploring the existing literature on
this topic, the authors aim to identify framework conditions that will enable
the broad principles that govern AI while securing that tax authorities operate
within defined boundaries, avoid overreach, and simultaneously safeguard the
individual rights of taxpayers. Balance between leveraging AI for efficiency gains
and preserving the principles of legality and individual rights remains central
to this inquiry. The next part of the article demonstrates the relationship
between AI in tax administrations and taxpayers’ rights, contextualizing the
latter, highlighting their relevance and the effectiveness of the existing
instruments in the protection of taxpayers’ rights in the era of AI. The
article concludes with a proposal for a new framework for protecting taxpayers’
rights in the digital age.