Role of Artificial Intelligence in Tax Administration and Fraud Detection

Abstract

The research paper aims to assess the impact of Artificial Intelligence (AI) in tax administration and fraud detection in five countries, namely the United States, United Kingdom, China, Australia, and Singapore, with a gap analysis for India, using a descriptive and comparative research design based on an interpretivist paradigm, with a focus on secondary data from government reports, OECD reports, national audit office reports, and peer-reviewed articles (2020-2026). A new Composite Efficiency Index (CEI) was also proposed, with five dimensions: fraud detection and accuracy (30%), cost efficiency (20%), governance and oversight (20%), technology maturity (15%), and taxpayer experience (15%). The research confirmed that AI has a significant impact on tax compliance, fraud detection, and tax collection efficiency (H₁₁ was accepted), but challenges in AI implementation are significant in all countries (H₁₂ was accepted). IRAS Singapore ranked first in the CEI index (8.93/10), followed by Australia (7.71/10), the UK (7.68/10), the USA (7.65/10), and China (6.09/10), where data availability was limited. For India, five strategic recommendations are proposed to advance from an estimated CEI of 5.5–6.0/10 toward world-class AI-enabled tax administration by 2030.