Governments are leveraging the benefits of AI and robotics in many fields like healthcare services, transportation, defense, and national security. Governments are rapidly accepting the use of AI, which is opening up new opportunities for innovation in Government services, like taxation. Tax is the primary source of money for the Government which is necessary to support all the public sector functions. Collecting taxes from citizens in a shorter time and reducing the number of Tax defaulters increases the effectiveness and efficiency of tax collection. Effective and efficient collection of tax enables the government to make adequate investments in public sector functions.
The two most common purposes of robotics and AI in taxation are preventing tax default and providing services to taxpayers. With the help of AI and robotics, defaulters who are paying less tax or not paying tax at all can be easily found by analyzing and monitoring the financial data of the person. AI can provide improved services like automated tax filing and can also help educate taxpayers to comply with tax filing. There are many different areas of taxation where robotics and AI can be implemented.
The applications of robotics and AI in taxation
The use of robotics and AI in taxation consists of many narrow and sharp use cases. AI systems can be used to communicate differently with different groups of people. For example, a group of people who are under-reporting their income can be accurately identified and penalized, instead of investigating and requesting them to cooperate. Let's get a closer look at some other benefits of robotics and AI in taxation:
One of the most basic and yet most useful applications of AI is process automation. The time-consuming tasks that comprise a tax professional’s workday are majorly repetitive processes which include processing documents, reporting, and others. Deploying AI-enabled robots to automate repetitive tasks would help tax professionals in performing repetitive procedures and allow them to focus on more intellectually challenging tasks. For instance, robots can be used to fill account numbers or asset ID numbers onto spreadsheets, and robots can be used for financial closeouts and reporting.
Tax professionals use accounting software to compute the financial data of a company. Robots can automatically enter information into accounting software from spreadsheets to reduce the burden on tax professionals. The use of robots will speed up lengthy procedures and get precise tax amounts faster. The faster a company receives the tax due, the more time it has to do the monthly, quarterly, and annual closing.
Before anything else can be done in the tax life cycle, a tax team has to classify documents, find the source of the documents that come in, and define what useful information is there in the documents. AI can accelerate the processes of classifying documents, defining the taxonomy of documents, and extracting the required data from these documents. ML algorithms can help AI-enabled robots to easily detect the capital gains and charitable contributions of a company, handle assessment notices and other matters that can be used to classify documents. Key data like the account number, number of payments on the tax bill, discount on the tax bill, and other data can be extracted effortlessly and with accuracy by AI-enabled robots. The accurate key data can then help for easy tax payment and filing the tax returns.
Tax evasion can hold back the development of a country to a certain extent. Hence, tax evasion has become a growing concern for many countries. Auditors try to identify fraud in the tax documents. Finding specific information from piles of documents can be like finding a needle in a haystack for auditors. With the help of ML algorithms, AI-enabled systems can be created that can sense anomalous entries in large datasets. Using predictive analytics, AI can help to fight against tax evasion.