SDG 16: Peace, Justice, and Strong Institutions | SDG 17: Partnerships for the Goals
Ministry of Finance | Ministry of Electronics and Information Technology (MeitY) | IndiaAI Mission | National e-Governance Division (NeGD)
The ADB explainer, based on an ADB-facilitated workshop, examines how Artificial Intelligence (AI) is transforming tax and customs administrations by strengthening risk management, audits, and service delivery. AI integration enables government agencies to move beyond traditional methods to more efficient, automated, and personalized systems.
Key Transformation Areas:
Automated Risk Management: AI algorithms flag suspicious transactions in tax and customs filings, detecting fraud and non-compliance with far greater precision than manual methods. Customs agencies are increasingly integrating AI with smart devices like X-ray scanners and cameras for automated risk assessment.
Accelerated Auditing: AI rapidly analyzes vast amounts of documentation to identify anomalies, significantly speeding up taxpayer and post-clearance audits while improving accuracy.
Exceptional Citizen Services: AI-driven support systems resolve citizen concerns instantly 24/7. Natural language processing allows users to interact in their preferred language, reaching marginalized groups and individuals with limited literacy.
Compliance and Proactive Guidance: Predictive analytics monitor taxpayer activity in real time, anticipating needs like filing deadlines and missing documents, and sending timely alerts to prevent compliance issues.
Operational Efficiency: Automating routine tasks such as registration, clearance, and refunds reduces human error and bias, allowing skilled staff to focus on more complex, high-value activities.
What is the primary advantage of AI in tax transparency? AI systems enforce consistent rules and maintain robust audit trails, ensuring transparent decision-making. This reduction in human discretion minimizes opportunities for corruption and strengthens public trust in government processes.
Policy Relevance
The deployment of AI is a strategic shift for administrations aiming to build resilient, trust-based revenue systems in Asia and the Pacific.
Resource Optimization: Predictive analytics allow for more targeted audits and better resource allocation, maximizing the impact of administrative efforts.
Governance and Accountability: Transparent, automated AI processes reduce avenues for corruption and enhance overall institutional accountability.
Inclusive Digital Literacy: By providing multi-channel support in various languages, AI helps bridge the gap for vulnerable populations who may otherwise struggle with complex tax systems.
Relevant Question for Policy Stakeholders: How will tax and customs administrations ensure that the AI models used to flag non-compliance are periodically audited for βalgorithmic biasβ to prevent unfair targeting of specific demographics or small-scale importers?
Follow the full news here: Enhancing Tax Administration, Compliance, and Public Services through AI