Tax Administration 2025

Executive summary

The Tax Administration Series (TAS) is a unique product containing a wealth of comparative data and other information on tax administration. It is intended to be used by tax officials to give them an understanding of the global trends in the design and administration of tax systems and to draw cross-border comparisons. While primarily aimed at analysts, it can also be a useful tool for senior tax administration managers or officials in ministries of finance when considering changes in tax system administration.

The 2025 edition of the TAS takes a closer look at national-level tax administrations in 58 jurisdictions. While the publication traditionally put its emphasis on performance-related data and ratios for the latest available fiscal year, a key focus of this edition is a 10-year perspective on the evolution of tax administration and how the rise of artificial intelligence is shaping the future of tax administration.

The rise of artificial intelligence

Past editions of the TAS have commented on the impact of the digitalisation of the wider economy and technological advancements on the operating models of tax administration. Some of these changes can take many years to implement, and the incremental progress that has been noted in the past continues to be observed in this 2025 edition.

There is one technology, however, that has experienced rapid growth in a relatively short period: Artificial intelligence (AI). The increased availability of the systems that can support AI over the past few years has prompted many tax administrations to adopt it to provide new and better services that can support improved efficiency and compliance, as well as reducing burdens.

Around 2015, when the first ISORA survey was developed, AI did not play a significant factor in tax administration. It was not even covered in the first ISORA survey, which is why there is no data on the use of AI by tax administrations for fiscal year 2014. First data on the use of AI by tax administrations is available for 2016, when 9% of administrations reported its implementation and use. Since then, the percentage of tax administrations that use AI has rocketed to 69% in 2023, with another 24% reporting they are implementing it for future use.

This significant increase in the use of AI is also visible in the number of examples that tax administrations provided for inclusion in this edition. Around 25% of the examples are AI related, and they highlight the wide range of deployments of AI across administrations – from, for example, supporting analytical work, to providing faster and more efficient services to taxpayers, or to improving case work selection. In addition, AI is automating high volume repetitive tasks so that tax administration resources can be focused on the more complex tasks.

10 years of ISORA data: Insights and perspectives

While AI is undoubtedly a hot topic in tax administration, the ISORA data also provides other high-level insights and perspectives regarding the evolution of tax administration. Highlights from comparing ISORA data over a 10-year period include:

• Tax administrations continue to be the primary actor in government revenue collection: Net collections by tax administrations average 63% of total government revenue, an increase of almost 8 percentage points since 2014. Tax administrations are the principal government revenue collection agency in three-quarters of jurisdictions covered in this report.

• A structural shift towards self-service channels: The data shows a move away from contact channels that occur during tax office working hours to channels that can be used 24/7. Since 2014, in-person contacts declined by 56%. At the same time, online contacts have tripled since 2018 to more than 3 billion contacts in 2023.

• Filing tax returns electronically has become the norm: Over the 10-year period, e-filing rates have increased significantly – between 18 and 24 percentage points – across the three main tax types. In 2023, close to 90% of personal income tax (PIT) returns were filed electronically. The share is even greater for corporate income tax (CIT, 96%) and value added tax (VAT, 99%). However, average on-time filing rates did not improve despite e-filing and prefilling regimes. On average, the rates have remained broadly static since 2014, although the underlying data for on-time filing shows significant variation in the evolution of on-time filing rates between jurisdictions.

• A potential effect of more data and new approaches for compliance risk management on compliance behaviour: While the available audit data indicates that audit adjustments rates have remained similar since 2014, the additional assessments raised from audits decreased significantly for PIT, CIT and VAT. This could hint at effective up-front compliance programmes and improved compliance behaviour, potentially a result of better services and taxpayer education programmes, and a deterrent effect with taxpayers understanding that tax administrations hold an increasing amount of data.

• Revenue collections grow faster than tax arrears: The total amount of outstanding arrears at the end of fiscal year 2023 was in the region of EUR 2.7 trillion. While this is a significant increase from the EUR 1.5 trillion reported in 2014, the average ratio of fiscal year-end arrears to net revenue collections has declined since then by around 10%.

• Technology helps fewer staff to serve more taxpayers: With an often increasing population and labour force, 60% of administrations report declining staff numbers, meaning that the remaining staff are having to serve more people. On average the population and labour force per full-time employee increased by around 15% between 2014 and 2023. Digital transformation is helping tax administrations respond to this challenge.

• A shift in the workforce profile: Between 2014 and 2023, the percentage of staff with less than 5 years of service has increased by 7.4 percentage points. With a significant number of staff expected to retire in the next few years – on average 28% of staff are 55 years or older – tax administrations will lose further knowledge. While this may also open opportunities to get new digital skills into administrations, a key challenge will be to transfer knowledge and experience.