State of use of AI tax systems
The first publicly available mentions of tax machine-learning algorithms used by the tax administration of the Republic of Lithuania date to 2019.
What functions are performed with AI?
Based on publicly available data, the sole function performed by tax machine-learning algorithm in Lithuania is:
- External risk-management (risk-scoring): The Labour State Inspectorate in Lithuania uses a machine-learning system to tackle undeclared work. The tool is used to score and rank taxpayers, in accordance with a colour code from green to red and predict which economic entities should be controlled.
What data can be processed by these systems?
The model uses both internal data from the State Labour Inspectorate, the Financial Administration (taxpayer data, VAT data, CIT, social security) and external data from other administrative or governmental bodies, such as the SLI Information System, the e-service for employers, the register of legal entities, the Inter-institutional data system (TDS), Board of State Social Security Fund or the State Tax Inspectorate.
Are these systems regulated by specific norms?
The model is not regulated by specific legal norms.
- C. Williams, ‘Developping efficient risk assessment tools to tackle undeclared work: a toolkit’ (Regional Cooperation Council, 2021), pp. 17-19: available at:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3944128;
- European Platform on Undeclared Work, ‘Toolkit on risk assessment for more efficient assessment as a means to tackle undeclared work’ (European Commission 2019), pp. 18-19.