Prospects of VAT Administration Improvement in Digitalized World: Analytical Review

Abstract

In conditions of integral digitalization, governments may face a shortfall in VAT revenues due to tax avoidance and frauds. Here arise two opposite hypotheses: 1) digital technologies can solve problems with VAT; 2) digital technologies are not capable to do so. The purpose of the study is to conduct an analytical review of the main problems and ways to improve the administration of VAT in the context of the digitalization of the economy. To achieve this, literature on digital technologies in VAT administration was analyzed. The literature sample consists of 25 sources on e-invoicing and 27 sources on blockchain in VAT administration. The main criteria for literature selection are: accessibility and significance of source; time horizon (last 10–15 years); keywords (“e-invoicing”, “blockchain”, “VAT”, “taxation”, “tax administration”); interdisciplinary approach (literature set represent standpoints of experts from different fields). It was established, that there is no consensus about e-invoicing and blockchain in VAT administration. These technologies have both shortcomings and advantages. The main result of the review is this: digital technologies are not a panacea for solving all problems with VAT administration. That is, both hypothesis of this paper is not proved, but not refuted. Digital technologies can simplify and reduce costs on VAT administration, provided there is a developed ICT infrastructure and consistent regulatory framework, a high tax culture, a low level of “shadow” economy. Interaction between countries in terms of the tax information exchange is also crucial. If these conditions are met, digital technologies in taxation can be effectively employed in the next 5–10 years in the most advanced countries; less developed countries will need much more time for this.

Is GRDP a mediating factor in enhancing local tax revenues due to ICT development in Indonesia?

“…However, this influence is even more significant if the GDP of the information and communication sector in the area is sufficiently high. The GDP of the information and communication sector can moderate the relationship between ICT access and infrastructure with local taxes and levies and is in line with the research of Celbis and De Crombrugghe (2018), Harkushenko (2022), Kim (2022) and Crespo-Rincón et al (2023). The GDP of the information and communication sector can moderate the relationship between ICT access and infrastructure with local taxes and regional levies by increasing local tax revenue and regional levies from various sectors.…”

“…The government should invest more in ICT infrastructure to enhance resilience, reduce future crises and foster innovation, productivity and competitiveness (Kim, 2022). Information regarding tax regulations can also be easily accessed by taxpayers enabling them to comply with their tax obligations with the evolving ICT infrastructure (Harkushenko, 2022) preventing tax fraud and corruption which will further encourage taxpayers to fulfill their obligations (Rojniruttikul & Vajrapatkul, 2021). The dissemination of information makes regional economies more homogeneous by reducing differences in institutions and cultures as well as the telecommunications capacity represented by a region's internet infrastructure (Celbis & De Crombrugghe, 2018).…”

Evolving Tax Compliance in the Digital Era: A Comparative Analysis of Ai-Driven Models and Blockchain Technology in U.S. Tax Administration

“…The research design for this study is structured around a comprehensive literature review, focusing on the integration and impact of AI and blockchain technologies in U.S. tax administration. This approach is informed by Harkushenko's (2022) methodology, which emphasizes the importance of a systematic analytical review in understanding the digitalization of tax systems. The study adopts a similar approach to evaluate the prospects and challenges of AI and blockchain in tax administration.…”

“…Data collection for this study primarily involves gathering and examining scholarly articles, government reports, and industry publications related to AI and blockchain in tax administration. This process is informed by Harkushenko's (2022) approach, which involves an extensive review of the literature on digital technologies in VAT administration. The analysis criteria for the collected data include evaluating the applicability of AI and blockchain technologies in tax administration, their effectiveness in enhancing tax compliance, and the challenges associated with their implementation.…”

Proposal of a guide for the interpretation, simplification of the regulatory process and good tax compliance, case of digital taxpayers, influencers

“…The results reflect that influencers need guidance to avoid future penalties or fines for tax evasion. [30] identifies tax consequences, such as fines or penalties, which it indicates could be combated by streamlining interaction with taxpayers through incentives. [31] mentions that, in the future, taxation in the area of e-commerce will need to be more intense and therefore tax consequences will need to be more intense.…”