Can ChatGPT be used in tax administrations? (Part 1)
The main purpose of this post is to expose various aspects related to the possible introduction of the ChatGPT in the TAs
- ChatGPT
The media interest in ICT is today marked by the appearance at the end of last year of the ChatGPT product, which is essentially an artificial intelligence “chatbot” that specializes in dialogue with humans. The company OpenAI developed it.
In fact, it is a great language model adjusted with both supervised and reinforcement learning techniques and has attracted attention for its detailed and articulate answers to any question or situation, although it has been criticized for its factual accuracy; which is not surprising because it shares (at least in its first versions) the general limitations of any AI language compared to human language, such as the difficulty to understand humor, nuances, irony, etc., but it far exceeds the versions of the “chatbots” of a few years ago.
It is a model with more than 175 million parameters, and trained with large amounts of text to perform tasks related to language, from translation to text generation.
The service was initially launched as free to the public, with plans to monetize it later and has reached 100 million active users in just two months since its appearance.
Due to the success of ChatGPT, the rest of the technological companies or those involved in the development of different AI variants have begun to move in order to take a share in this growing market of AI-based “chatbots”, considering it a qualitative leap that allows greater flexibility in its use and, above all, a new leap when it comes to approximating the language of machines and that of men.
Given this approach and its versatility, the market forecasts its application in multiple areas from education, human resources, companies, public sector, etc. and, logically, just as the first-generation “chatbots” were becoming widespread in TAs, their possible use by these public organizations is being considered, as well as the advantages (and disadvantages, let’s not forget that no technology is neutral, nor magically solves all the problems of an organization) of its application in tax procedures.
- The virtual assistants in TAs.
The first point is that there are different types of models that work with AI, according to their development and functionalities.
There are, first of all, the conversational AI “bots”, AI assistant, intelligent virtual assistant, virtual customer assistant, digital assistant, conversational agent, virtual agent, conversational interface and many others.
Therefore, the Chat GPT is only an advanced evolution of previous techniques.
The increasing use of AI by TAs is noticeable, since about 75% of TAs report that they are using or are in the implementation phase to use advanced techniques to exploit data in the future, in such a way as to reduce the need for human intervention.[1]
Although these virtual assistants are still in a primitive state, their implementation is already generating efficiencies that are freeing up resources to be used in other areas. AI is very good, in general, for automating repetitive tasks, increasing accuracy and efficiency, and discovering hidden ideas and trends, but their implementation is expensive, needs controls and is more appropriate for certain administrative services (legal responses, risk analysis, etc.) than for other tax functions and procedures (agreements, auditing, etc.).
Regarding the use cases, it is appropriate to refer to the research that the authors carried out in the book “DIGITALIZATION IN TAX ADMINISTRATIONS: With particular reference to virtual assistants. State of the issue, especially in Latin America”, Editorial Tirant lo Blanch 2022, without prejudice to noting that since that publication date, the advances in the generalization and implementation of Virtual Assistants (VAS) by TAS have multiplied.
As a synthesis of this, we elaborate the following table, where in the first column the Tax Administration and the corresponding country are reflected and in the second column the main functionalities of the Virtual Assistant (VA) under examination.
| TA – COUNTRY | MAIN FUNCTIONALITIES |
| CRA -Canada | “CHARLIE” was launched in March 2020 to answer questions from taxpayers, especially to make tax returns. During the first year he answered 5 million questions. |
| ATO- Australia | “ALEX” was launched in 2016 to deal with queries related to taxes, property rights, income and deductions and filing of returns and taxes. He had 1.4 million conversations between July 1, 2020 and March 23, 2021. |
| HMRC – United Kingdom | “RUTH” answers simple questions and provides links to TA websites. |
| VERO – Finland | “VEROBOT” provides all the information related to business taxes and labor income in the country. |
| STA – Sweden | “SKATTI” answers questions about population registration and personal taxes 24 hours a day, all year round. It can understand questions within other areas of expertise and with link to the website. As of October 2019, Skatti has had more than 320,000 conversations, including about 800,000 questions. |
| REVENUE – Ireland | The virtual AV answers tax-related questions and can also be operated by voice. |
| FTS- Russia | “TAXIK” is integrated with the following online services: appointments with inspection; transportation tax calculator; insurance premium calculator; and property and territorial tax calculator. |
| STA- China | “ROBOTCHAT” provides answers about taxes and allows to direct more complicated questions to human experts. |
| IRAS – Singapore | “ASK JAMIE” helps with the presentation of income tax return to taxi drivers and entrepreneurs engaged in private car rental. It is available at all government agencies. In 5 years of launch it has already answered more than 15 million questions from citizens. |
| OSS – Latvia | “TOM” has been answering since January 2020 about opening hours and locations of offices, registering a company, how to use the electronic filing system, annual filing of tax returns and deductible expenses. |
| EMTA- Estonia | The Virtual Assistant was launched in 2020 helps to promote Estonia globally. It provides information from location to population, nature, taxes, etc. in multiple languages. |
| SAT – Mexico | “ORIENTASAT” launched in 2020, is aimed especially for individuals to fundamentally help in the preparation of the income tax return. It uses a knowledge base consisting of 1,149 standard answers and 17,776 question variants. |
| AEAT – Spain | VA VAT for the execution of the SII, foreign trade VAT, deadline calculator, census declaration, conduct of the self-assessment form 303 (VAT) for property lessors and other functionalities, for example, recently, access to real estate auctions. In 2020, there have been more than 1,100,000 queries resolved by the VA. |
| SAT – Guatemala | ”RITA”, implemented in 2019, answers questions of the Vehicle Circulation Tax, the Unified Tax Registry, Online Electronic Invoice, Tax Solvency, Receipt of Complaints, customs concepts and the opening hours of the agencies. In 2020, it received 798 thousand inquiries, with 75% of satisfactory comments. |
| Ministry of Finance – Costa Rica | “TRAVI” was released in 2020. It answers about the use of the Portal, self-management of passwords, electronic invoices, cryptographic key, digital signature, Catalog of Goods and Services, Registration in the Single Tax Registry, de-registration and modification in the RUT, means of payment, temporary cancellation, consultation of omitted and delinquents |
| SUNAT – Peru | “SOFIA” was released in 2018. It deals with lottery issues of tax receipts, income tax refunds, other labor income issues. In the year 2021 SOFIA has responded to 248,125 messages with a 97% effectiveness. |
| DIAN – Colombia | “DIANA” allows consultations on electronic invoice, electronic signature, Personal Income, Simple Taxation Regime, information related to the RUT, the tax calendar, the contact points and their main offices. |
| SRF – Brazil | “LEON” was launched in 2021 on customs issues and another VA was developed in 2021 on issues related to Personal Income Tax |
| SII – Chile | “SOFIA” was created in 2021 and assists in various income tax issues |
Source: Table prepared on the basis of the research carried out in the book “DIGITALIZATION IN TAX ADMINISTRATIONS: With particular reference to virtual assistants. State of the question, especially in Ibero-America” by the authors Domingo Carbajo Vasco and Alfredo Collosa, Editorial Tirant lo Blanch 2022. We warn that the table was drawn up to April 2022, date of publication of the book, which is already being overtaken by the speed of events, as all TAs are implementing AI tools.
[1] Passim. OECD. Tax Administration 2022. Comparative Information on OECD and other Advanced and Emerging Economies, June 22, 2022.
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