To Combat Tax Evasion, Italian Government Uses Artificial Intelligence

JAKARTA. The Italian government is increasingly developing the use of Artificial Intelligence (AI), to combat tax evasion.

The intelligence being developed in the country is called the VeRa Algorithm which is able to compare the value of income, accounts, and electronic payments with tax filing.

Citing Bloomberg, the VeRa Algorithm can also identify taxpayers based on their level of compliance risk in paying taxes.

After that, every taxpayer who falls into the high-risk category will be asked to explain any data collected by the Italian tax authorities.

To date, the tax authorities in Italy have identified 1 million high-risk cases and managed to prevent tax fraud with a value of over 6.8 billion Euros or the equivalent of US$ 6.85 billion.

However, Italy is recorded to have lost more than 99 billion euros a year due to tax evasion, with 30 billion euros of which came from the payment of Value Added Tax (VAT).

In fact, during the pandemic due to the loosening of law enforcement efforts the amount of uncollected taxes in Italy reached 1.1 trillion euros.

Conflicted by Privacy Policy

However, the Italian government's efforts to use AI are constrained by several factors. Among them are data protection policies that allow the use of personal data with the permission of the owner.

Thus, any data collected by the VeRa Algorithm must be anonymous and the input process must not be discriminatory.

Another challenge faced by tax authorities in Italy in their pursuit of revenue is the high cash economy and the culture of impunity that has fueled the economic crisis.

As well as the high level of organized crime, corruption makes people think that the public services they receive are not commensurate with the amount of taxes paid.

Apart from Italy, several countries that are already using AI in the field of taxation are France and India. India uses AI to assess taxpayer and tax administration risk.

In France, artificial intelligence was used to create satellite images and detect 20,000 undeclared swimming pools and collect 10 million euros in unannounced taxes.