The current EU VAT system is increasingly complex and susceptible to fraud for businesses and tax administrations. This is partly because it has not kept pace with the challenges and opportunities presented by new digital technologies. Against this background, the European Commission has taken the initiative to adapt the EU VAT framework to the digital world.
Having addressed the use of Artificial Intelligence (AI) in tax in a white paper, our FA VII’s latest publication is devoted to the broad topic of Tax Technology, of which AI is just one area. This is done in a glossary that explains essential technologies and techniques that are already being used in the tax environment to fulfill the tax function more efficiently, or are to be used increasingly in the future.
The OECD’s Forum on Tax Administration (FTA), together with eight partner organizations, launched the online Inventory of Tax Technology Initiatives (ITTI) in early April 2022. This contains measures and projects initiated by tax authorities to drive forward the digitization of the taxation process.
The use of artificial intelligence (AI) is also gaining increased importance to the tax sector. The “AI” working group from our Expert Committee VII has produced an initial IDSt publication on this subject to present the basics and the current status. We hope this will provide more clarity into the meaning of AI in tax law and constructively guide the discourse for the future use of AI systems.
Digitization is the most advanced in the financial administration compared to other administrations. Nevertheless, there is a constant need for adaptation and improvement due to new political and legal developments. In order to advance tax digitization, achieving the digitizability of tax law standards is of essential meaning.
Dr. Achim Pross has accepted his appointment to the Advisory Board of IDSt. He is head of the International Cooperation and Tax Administration Division of the OECD Centre for Tax Policy and Administration. His appointment is intended to intensify the exchange of information on the results of IDSt’s work as well as international deliberations and developments at the OECD level.
We would like to draw your attention to the dissertation entitled “Combating VAT evasion in cross-border digital services provided to consumers using blockchain technology” by Dr. iur. Robert Müller LL.M., which has just been published and is relevant for IDSt Expert Committee VI.
Due to the increasing relevance of Tax Law Technology, the Institute for Austrian and International Tax Law has founded the WU Tax Law Technology Center (WUTLTC). The objective of the center is to create a link between theoretical principles and feasible solutions.
The “Center for Digitization of Tax Law at Ludwig-Maximilians-University Munich” (LMUDigiTax) invites to its first conference – with the participation of several speakers from the IDSt expert committees. The use of blockchain, the digitalizability of tax standards and the digitalization of administrative and fiscal court proceedings will be addressed.
On December 21, 2021, Prof. Dr. Wolfgang Ernst, Rector of the University, and Prof. Dr. Alexandra Albert, Dean of Faculty II, presented the Chairman of our Expert Committee I, Dr. iur. Christoph Schmidt, his certificate of appointment as Professor (W2) for life at the University of Public Administration and Finance Ludwigsburg.
The coalition agreement provides the introduction of a system of transactional tax reporting obligations. This concerns the core area of our Expert Committee III. Hence the IDSt has sent a petition on this to the BMF on December 23, 2021. We hope to be able to critically and constructively accompany the upcoming legislative process at an early stage.
With his dissertation, Dr. Matthias Gries, Deputy Chairman of IDSt Expert Committee VI, provides important impulses for further development towards a digital reporting system for intra-Community trade in goods. His proposals have great potential to reduce government-generated bureaucratic costs. This is the second time Gries has been honored for his outstanding work.
The coalition agreement was signed on Nov. 24, 2021. It does not contain a “big hit” on tax law reform. For digitization in tax law, on the other hand, and thus for IDSt, it provides extensive starting points. We can build on this in the next four years of this legislative term to advance the issues of our expert committees I to VIII.
Audicon GmbH has established a competence center for the digital transformation of auditing together with the German Research Center for Artificial Intelligence (DFKI) and four well-known auditing firms. In October 2021, the Competence Center Audit Transformation (CCAT) launched its first project to support the audit process with the help of artificial intelligence (AI). The founders are also largely networked through IDSt.
IDSt sees great opportunities in the goals of the new institute and the data it will bring together for research purposes, as well as the planned collaboration with universities: new insights from tax microdata sets would be of interest to numerous IDSt technical committees.
Christoph Schmidt, Chairman of Expert Committee I “Digitizability of Tax Standards,” receives the award for his concrete reform proposals for effectuating and further developing the German taxation process.
The National E-Government Competence Center shows that it is possible to represent laws using domain-specific languages (DSL) and their automated evaluation. This result is of great interest for IDSt’s work on the digitizability of tax standards.
The Portuguese Presidency and the European Parliament agreed on a directive on public country-by-country tax reporting in June 2021. IDSt is looking at solutions for managing the increasing reporting obligations for companies in a legally secure manner with the help of digital solutions.
The ability to automate and digitalize current tax law is in the interest of taxpayers and tax authorities. The FDP parliamentary group is dealing with this in a small question on the law to modernize the taxation procedure, as well as the federal government in its response.
Prof. Dr. Robert Risse, Chairman of Expert Committee VI “Distributed Ledger in Taxation Processes” pleads in Trendradar TAX for a new understanding of processes in the digital transformation in tax law.
Auditors are increasingly confronted with the question of the reliability of machine-based systems. The IDW met with the German Federal Office for Information Security (BSI) at the beginning of March to exchange views on the “Testing and Certification of AI”.
In its report entitled “Tax Administration 3.0: The Digital Transformation of Tax Administration,” the OECD addresses the outline of a new tax administration that increasingly uses digital solutions.
With the introduction of a new VAT system, far-reaching changes for cross-border online trade will take place as of July 1, 2021.