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The 2014 CIAT General Assembly opened yesterday in the City of Rio de Janeiro, Brazil. The theme of this year’s event is “The Use of Information and Communication Technologies in the Tax Administration.” The keynote speaker was Mr. Hong-Eng Koh from Oracle. The title on his presentation was “Needles in Stack of Needles: Detecting Tax Fraud & Evasion Through Big Data.” His presentation was very enlightening. It focused on using technology to detect non-compliance. New catch phrases and concepts creep into my vocabulary: tax administrators are the “salespersons” of services; and, taxpayers, the unwilling customers.

Significant progress has been made in the use of intelligent systems with “Business Intelligence” and “Big Data.” But the real wake-up call came when Mr. Koh spoke on algorithms that detect major issues that one is completely unaware of, or basically, not even looking for. Thus, the mounting danger tax administrations face is “not knowing what they don’t know.” Scary.

All tax administrations are facing tax evasion and there certainly is a lot of activity going on below the water level. While technology is helping the tax administrations, it’s also doing wonders for tax evaders. Technology adds a whole new set of troublesome issues. Cloud computing is just one, but there’s also the virtual currency, Bitcoin. Tax administrations are attempting to address these issues; e.g., the US IRS taxes Bitcoin transactions as capital gains.

Another interesting point made by Mr. Koh was the use of social networks for the benefit of tax administrations but also for very dubious use by some “unwilling customers.” It is truly a brave new world we live in today.

Thank you, Mr. Koh for sharing your wisdom on the Assembly theme.

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