The digital age is changing the relationship between tax authorities and taxpayers. Learn the impact and ways to rise to the challenge.
Driven by a desire for more revenue, greater efficiency and improved compliance in an atmosphere of shrinking resources, tax authorities are increasingly relying on digital tax data gathering and analysis — using digital platforms to facilitate real-time or near real-time collection and assessment of taxpayer data.
This move toward tax “digitalization” is allowing tax authorities to collect tax data in real time or near real time; they can then use the information to respond quickly and in more targeted ways to perceived compliance risks. Digitalization is, in some cases, allowing taxpayer information to be cross-referenced and shared among governments and agencies.
Some countries are leading the digital revolution, others are forming a second wave and still others are years away from embracing digitalization. Some Latin American countries, such as Brazil, are among the more advanced, while the United States is not as far along in its efforts.
As countries move toward digitalizing their tax administration, their efforts can often follow a similar pattern. Of course, the move to digitalization is not necessarily linear, nor should higher levels of digitalization be viewed as the ultimate goal of either taxpayers or tax authorities.