Use of Artificial Intelligence Technology in Tax Management: Evaluation of The Principle of Transparency Within the Framework of International Legislation Provisions

Year 2025, Volume: 10 Issue: 1, 1 - 20, 30.06.2025

Burçin Bozdoğanoğlu , Ayşegül Yücel

https://doi.org/10.30927/ijpf.1522095

Abstract

Artificial intelligence is a technology that has found its place in all areas of life with the digitalization process and is used in many fields of science and disciplines with its sub-techniques. Within this wide usage area, the services provided by public administrations have also been affected by artificial intelligence technology. The tax management structure formed by the taxpayer and the administration has also changed under the influence of artificial intelligence technology. Most transactions in tax management based on automated decision-making can provide many advantages to the administration and the taxpayer. However, the use of artificial intelligence models with a black box or an intricate coding structure in the taxation process may violate the principle of transparency and may result in damage to taxpayer rights. The aim of the study is the determination of the problems in ensuring transparency, which is a public principle, as a result of the use of artificial intelligence technology in tax management and the presentation of suggestions for this purpose. In this context, the study used the literature review method; considering the current international legislation provisions, concluded that a legal system that protects taxpayer rights should be organized in order to ensure transparency in the use of artificial intelligence technology.

Keywords

Tax management , Artificial intelligence , Transparency , Taxpayer rights

References

• Adelekan, O. A., Adisa, O., Ilugbusi, B. S., Obi, O. C., Awonuga, K. F., Asuzu, O. F., & Ndubuisi, N. L. (2024). "Evolving Tax Compliance in the Digital Era: A Comparative Analysis of Ai-driven Models and Blockchain Technology in U.S. Tax Administration". Computer Science & IT Research Journal, 5(2), 311-335.
• Ahmed, I., Jeon, G., & Piccialli, F. (2022, August). "From Artificial Intelligence to Explainable Artificial Intelligence in Industry 4.0: A Survey on What, How, and Where". IEEE Transactions on Industrial Informatics,, 18(8), 5031-5042. doi:10.1109/TII.2022.3146552
• Akdoğan, A. (2020). Kamu Maliyesi (21. ed.). Ankara: Gazi Kitabevi.
• Buckley, P., Doyle, E., McCarthy, B., & Gilligan, R. (2022). Artificial Intelligence and The Tax Practitioner. Journal of Tax Administration, 7(2), 6-26.
• Confalonieri, R., Coba, L., Wagner, B., & Besold, a. R. (2021). "A Historical Perspective of Explainable ArtificialIntelligence". WIREs Data Mining and Knowledge Discovery, 11(1), 1-21. doi:10.1002/widm.1391.
• EU. (2024). EU AI Act. Retrieved May 18, 2024, from Key Issues: https://www.euaiact.com/key-issue/5
• Faúndez-Ugalde, A., & Mellado-Silva, R. (2023, July 13). "Use of Robotic Process Automation By Tax Administrations and Impact on Human Rights". Revista Chilena de Derecho y Tecnología(12), 1-24. doi:10.5354/0719-2584.2023.65457
• Furche, T., Gottlob, G., Libkin, L., Orsi, G., & Paton, N. W. (2016). "Data Wrangling for Big Data: Challenges and Opportunities". Proceedings of the 19th International Conference on Extending Database Technology (EDBT) (pp. 473-478). Bordeaux: University of Konstanz.
• Górski, Ł., Kuźniacki, B., Almada, M., Tyliński, K., Calvo, M., Asnaghi, P. M., . . . Pera, O. (2024, May 07). "Exploring Explainable AI in the Tax Domain". Artificial Intelligence and Law, 1-30. doi:10.1007/s10506-024-09395-w
• Gyevnara, B., Ferguson, N., & Schafer, B. (2023). "Bridging the Transparency Gap: What CanExplainable AI Learn From the AI Act?" In K. G. (Eds.), ECAI 2023 (pp. 964-971). Poland: European Conference on Artificial Intelligence ECAI 2023.
• Hosain, M. T., Anik, M. H., Rafi, S., Tabassum, R., Insia, K., & Siddiky, M. M. (2023, December 31). "Path To Gain Functional Transparency In Artificial Intelligence With Meaningful Explainability". Journal of Metaverse, 3(2), 166-180. doi:10.57019/jmv.1306685
• Ihnatišinová, D. (2021). Digitalization of Tax Administration Communication Under the Effect of Global Megatrends of the Digital Age. SHS Web of Conferences -The 20th International Scientific Conference Globalization and its Socio-Economic Consequences 2020, 1-10.
• Intelligence, O. f. (2023, August 03). Policy Paper: A Pro-Innovation Approach to AI Regulation. Retrieved 05 14, 2024, from AI Regulation: A Pro-Innovation Approach: https://www.gov.uk/government/publications/ai-regulation-a-pro-innovation-approach/white-paper#executive-summary
• Judgment of the Court (First Chamber) of 7 December 2023., C-634/21. (European Court of Justice December 7, 2023). Retrieved from https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62021CJ0634
• Kerinc, N., & Romani, M. S. (2022). "AI Biases And Its Consequences on Taxation". In J. Korving, N. Kerinc, & F. S. Man (Eds.), Taxes Crossing Borders (and Tax Professors Too): Liber Amicorum Prof. Dr R.G. Prokisch. Maastricht: Maastricht University Press.
• Kusche, I. (2024). "Possible Harms of Artificial Intelligence and The EU AI Act: Fundamental Rights And Risk". Journal of Risk Research, 1-14. doi:10.1080/13669877.2024.2350720
• Kuźniacki, B., Almada, M., Tylinski, K., & Górski, Ł. (2022a). "Requirements for Tax XAI Under Constitutional Principles and Human Rights". Explainable and Transparent AI and Multi-Agent Systems 4th International Workshop, EXTRAAMAS 2022, Virtual Event, May 9–10, 2022, Revised Selected Papers (pp. 221-238). Springer.
• Kuźniacki, B., Almada, M., Tyliński, K., Górski, Ł., Winogradska, B., & Zeldenrust, R. (2022b, September 02). "Towards eXplainable Artificial Intelligence (XAI) in Tax Law: The Need for a Minimum Legal Standard". World Tax Journal, 14(4), 1-28.
• Larsen, B. C., & Küspert, S. (2024, May 21). Regulating general-purpose AI: Areas of convergence and divergence across the EU and the US. Retrieved from Brookings: https://www.brookings.edu/articles/regulating-general-purpose-ai-areas-of-convergence-and-divergence-across-the-eu-and-the-us/
• Larsson, S., & Heintz, F. (2020). "Transparency in Artificial Intelligence". Internet Policy Review, 9(2), 1-16. doi:10.14763/2020.2.1469
• Marchenko, L. (2022). "Digitalization of the Tax Administration System in Ukraine Taking Into Account The Experience of Developed Countries". Economic Analysis, 32(4), 127-134.
• Mökander, J., & Axente, M. (2023). "Ethics based Auditing of Automated Decision Making Systems: Intervention Points and Policy Implications". AI & SOCIETY(38), 153-171.
• Mutlu, F. (1998). Vergi Yönetimi Kavramı Örgütlenmesi ve Ülkemiz Açısından Etkinlik Sorunu. Ankara: Gazi Üniversitesi SBE.
• Nunes, E. H., Oliveira, J. C., Melo, L. M., Feitosa, C. E., & Monteiro, I. T. (2024, April 02). "Democracy Out-of-the-Box: Analysis of Compliance with Constitutional Principles in Tax Policies That Use Artificial Intelligence". Journal on Interactive Systems, 15(1), 1-16. doi:10.5753/jis.2024.3879
• OECD. (2019-2024a, May 03). Recommendation of the Council on Artificial Intelligence. (OECD, Editor) Retrieved May 30, 2024, from OECD Legal Instruments: https://legalinstruments.oecd.org/en/instruments/oecd-legal-0449
• OECD. (2019-2024b, May). Transparency and explainability (Principle 1.3). (OECD, Editor) Retrieved June 04, 2024, from OECD.AI Policy Observatory: https://oecd.ai/en/dashboards/ai-principles/P7
• OECD. (2020). Tax Administration 3.0: The Digital Transformation of Tax Administration. Paris: OECD. Retrieved from OECD (2020), http://www.oecd.org/tax/forum-on-tax-administration/publications-and-products/tax-administration-3-0-the-digital-transformation-of-tax-administration.htm
• OECD. (2022). Tax Administration 2022: Comparative Information on OECD and other Advanced and Emerging Economies. Paris: OECD Publishing. Retrieved from https://doi.org/10.1787/1e797131-en.
• OECD. (2023). Tax Administration 2023: Comparative Information on OECD and other Advanced and Emerging Economies. Paris: OECD Publishing. Retrieved from https://doi.org/10.1787/900b6382-en.
• Office, I. C. (2022, October 17). Explaining Decisions Made with AI. Retrieved June 10, 2024, from ico.: https://ico.org.uk/for-organisations/uk-gdpr-guidance-and-resources/artificial-intelligence/explaining-decisions-made-with-artificial-intelligence/part-1-the-basics-of-explaining-ai/definitions/
• Office, I. C. (n.d.). Your Rights Relating To Decisions Being Made About You Without Human Involvement. Retrieved from ico.: https://ico.org.uk/for-the-public/your-rights-relating-to-decisions-being-made-about-you-without-human-involvement/
• Olsen, H. P., Hildebrandt, T. T., Flügge, A. W., Larsen, M. S., & Wiesener, C. (2024, March). The Right to Transparency in Public Governance: Freedom of Information and the Use of Artificial Intelligence by Public Agencies. Digital Government: Research and Practice, 5(1), 1-15.
• Oswald, M. (2018, August 07). "Algorithm-Assisted Decision-Making in the Public Sector: Framing the Issues Using Administrative Law Rules Governing Discretionary Power". Philosophical Transactions A: Mathematical, Physical and Engineering Sciences, 1-27. doi:https://doi.org/10.1098/rsta.2017.0359
• Parycek, P., Schmid, V., & Novak, A.-S. (2023, June 20). "Artificial Intelligence (AI) and Automation in Administrative Procedures: Potentials, Limitations, and Framework Conditions". Journal of the Knowledge Economy, 1-26. doi: 10.1007/s13132-023-01433-3
• Pica, L. M. (2022). "Artificial Intelligence, Tax Law and (Intelligent?) Tax Administration". European Review of Digital Administration & Law – Erdal, 3(1), 141-149.
• Resseguier, A., & Ufert, F. (2024)."AI Research Ethics is in Itsinfancy: The EU’s AI Act Canmake It A Grown-Up". Research Ethics, 20(2), 143-155.
• The Department for Science, I. a. (2023, August). A Pro-Innovation Approach to AI Regulation. White Paper. Retrieved May 12, 2024, from https://www.gov.uk/government/publications/ai-regulation-a-pro-innovation-approach/white-paper#annex-b-stakeholder-engagement
• Thiebes, S., Lins, S., & Sunyaev, A. (2021). "Trustworthy Artificial Intelligence". Electronic Markets (31), 447–464.
• Zalnieriute, M., Moses, L. B., & Williams, G. (2019). "The Rule Of Law and Automation of Goverment Decision-Making". Modern Law Review, 82(3), 1-25. doi:Zalnieriute, Monika and Bennett Moses, Lyria and Williams, George, The Rule of Law and Automation of Government Decision-Making (January 1, 2019). Forthcoming, (2019) http://dx.doi.org/10.2139/ssrn.3348831
• Zaqeebaa, N., Alqudaha, H., Alshira’h, A. F., Lutfi, A., Almaiah, M. A., & Alrawad, M. (2024). "The Impact of Using Types of Artificial Intelligence Technology in Monitoring Tax Payments". International Journal of Data and Network Science(8), 1577–1586. doi:10.5267/j.ijdns.2024.3.009