Tax Administration Digitalisation and Digital Transformation Initiatives

7. Governance frameworks

Embedding digital transformation into the core governance and processes of the tax administration is important to help to ensure that longer-term transformation is considered alongside other short-term priorities. Digital transformation also necessitates the joining-up of systems and processes across multiple stakeholders, including private and public sector stakeholders domestically and internationally. Having a governance framework can help to bring together those stakeholders in a structured manner and thus assist tax administrations with establishing clear decision-making processes, guidelines, and defined roles and responsibilities to effectively implement and oversee digital transformation initiatives.

There are different ways of implementing governance frameworks and the approaches may vary according to an administration’s unique context and needs. At its core, though, it will involve the administration setting objectives for the digital transformation, alongside a number of strategic actions that can be taken to achieve these objectives, as well as defining the way stakeholders co-operate. This chapter examines how tax administrations approach digital transformation and the strategies and governance features that they have put in place.

Digital transformation strategy

Digital transformation represents a fundamental change in the operating model for an organisation, and for large and complex organisations such as tax administrations this can only happen incrementally. To provide for a structured approach, many administrations are increasingly developing digital transformation strategies that set out objectives and plan the timing and priority of the incremental steps.

To support tax administrations with determining possible pathways it may wish to follow in its digital transformation journey, the OECD’s Forum on Tax Administration (FTA) created a Digital Transformation Maturity Model (OECD, 2022[1]) which is available in four languages. The model is a self-assessment tool that can help organisations understand their current level of digital maturity and, by setting out the pathway for higher levels of maturity, can help inform digital transformation strategies and identify target areas for improvement. The model has been completed by almost 60 tax administrations. The assessment results, published in the form of an anonymised heat map (see Figure 7.1. for the latest results), also allow tax administrations to compare themselves with peers and to reach out, through the FTA Secretariat, for peer-to-peer discussion and learning purposes. (OECD, 2022[1])

Figure 7.1. Digital Transformation Maturity Model self-assessment results

Source: OECD (2022), Digital Transformation Maturity Model, https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/tax-administration/digital-transformation-maturity-model.pdf (accessed on 12 February 2025).

The importance of digital transformation strategies is evident when looking at Table 7.1. which illustrates that nearly 80% of administrations have developed a digital transformation strategy. Of those that have, close to 70% of administrations reported having strategies that last 3-5 years, with the remaining administrations having strategies with shorter (9%) or longer-term timeframes (21%).

Table 7.1. also confirms that tax administrations recognise the importance of monitoring the progress of their digital transformation strategy, with the vast majority of administrations doing so. There is also value in administrations considering whether and how they should participate in a wider digital transformation strategy of the government. This may help provide joined-up government services in the future, reduce costs through economies of scale, and avoid duplication of efforts. As shown in Table 7.1., virtually all administrations align their digital transformation strategy to the government’s wider digital transformation strategy. Finally, having ring-fenced funding for the duration of the strategy may also be something administrations want to consider to ensure its sustainability, with just under half of administrations doing so.

Table 7.1. Digital transformation strategy features, 2024

Percent of administrations that have the respective process in place

Digital transformation strategy developed	If yes, …
Time frame of the strategy			Progress against the digital transformation strategy is monitored	Funding is ring-fenced for the duration of the strategy	Government has a wider digital transformation strategy	If yes, …
Less than 3 years	3 to 5 years	More than 5 years				Administration’s strategy has been aligned to the government’s wider digital transformation strategy
79.6	9.3	69.8	20.9	95.3	48.8	97.7	97.6

Source: (OECD et al., 2024[2]), Inventory of Tax Technology Initiatives, https://www.oecd.org/content/oecd/en/data/datasets/inventory-of-tax-technology-initiatives.html (accessed on 7 February 2025).

Digital transformation affects all parts of an administration as well as a broad range of stakeholders, including taxpayers, intermediaries, service providers and policy makers. To ensure success, administrations may wish to involve those stakeholders already during the development of the strategy. As can be seen in Table 7.2., nearly all administrations (98%) that have a digital transformation strategy have involved all relevant internal stakeholders, and a significant amount (86%) have sought input from external stakeholders. Making use of data and analytical tools, just over half of administrations have forecast different scenarios during the process of drawing up the strategy.

Table 7.2. Digital transformation strategy development, 2024

Administrations that have the respective process in place as a percent of those that have a digital transformation strategy

All key internal stakeholders, including senior management and relevant functional areas, involved in drawing-up the strategy	Input sought from external stakeholders, such as other parts of government, tax policy makers, taxpayer bodies and representatives	Data analysis and analytics used to forecast different scenarios during the process of drawing-up the strategy
97.7	86.0	53.5

Note: Percentages relate to administrations that have developed a digital transformation strategy (see Table 7.1.).

Source: (OECD et al., 2024[2]), Inventory of Tax Technology Initiatives, https://www.oecd.org/content/oecd/en/data/datasets/inventory-of-tax-technology-initiatives.html (accessed on 7 February 2025).

Digital transformation governance

An important part of governance frameworks is having a governance body to oversee the relevant processes, provide strategic direction, and ensure the smooth implementation of the recommended actions laid out in the digital transformation strategy.

Table 7.3. outlines that close to 80% of administrations have a senior management governance body in place to oversee the digital transformation of the administration. Of these, nearly half have external stakeholders holding formal positions on the governance body. Four fifths of the external stakeholders come from other parts of government, followed by the private sector (35%) and civil society (25%).

Table 7.3. Governance bodies, 2024

Percent of administrations that have the respective process in place

Senior management governance body established to oversee the digital transformation	If yes, …
External stakeholders have formal positions on the governance body	If yes, sectors where external stakeholder come from …
	Other parts of government	Private sector	Civil society	Other sectors
77.8	47.6	80.0	35.0	25.0	15.0

Source: (OECD et al., 2024[2]), Inventory of Tax Technology Initiatives, https://www.oecd.org/content/oecd/en/data/datasets/inventory-of-tax-technology-initiatives.html (accessed on 7 February 2025).

In addition to governance bodies, there are other relevant governance features and processes that administrations may have in place, as set out in Table 7.4. For example, around 80% of administrations have programme-management activities adopted to support the transition to a digital tax administration, and 70% have specific positions in place to manage and lead the work on digital transformation, such as a chief digital officer.

It is also interesting to see that where governments have a whole of government approach to digital transformation governance, slightly more than 60% of administrations are directly represented in such governance structures, a clear sign of the importance of tax administration to wider digital transformation within a jurisdiction.

Table 7.4. Other selected governance features, 2024

Percent of administrations that have the respective process in place

Programme-management activities adopted that support transitioning to a digital tax administration	Specific roles / positions in place to manage and lead the work on digital transformation, e.g. a chief digital officer	Government has a whole of government approach to digital transformation governance	If yes, …
Administration is directly represented in the governance structures of the whole of government approach
81.5	70.4	72.2	61.5

Source: (OECD et al., 2024[2]), Inventory of Tax Technology Initiatives, https://www.oecd.org/content/oecd/en/data/datasets/inventory-of-tax-technology-initiatives.html (accessed on 7 February 2025).

Understanding the importance of setting a digital transformation strategy and having the proper governance structures in place, the OECD published a new report Tax Administration 3.0 - From Vision to Strategy (OECD, 2025[3]). This report describes the actions that Commissioners and senior leaders can take in order to develop and operationalise a digital transformation strategy. It covers organisational change and how administrations operate internally, as well as how they engage with the wider tax ecosystem. It also contains several links to presentations on actions already being taken by different administrations in order to provide inspiration for possible new initiatives.

References

[3] OECD (2025), Tax Administration 3.0 - From Vision to Strategy, OECD, Paris, http://www.oecd.org/content/dam/oecd/en/topics/policy-issues/tax-administration/tax-administration-3-0-from-vision-to-strategy.pdf.

[1] OECD (2022), Digital Transformation Maturity Model, OECD, Paris, https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/tax-administration/digital-transformation-maturity-model.pdf (accessed on 12 February 2025).

[2] OECD et al. (2024), Inventory of Tax Technology Initiatives, https://www.oecd.org/content/oecd/en/data/datasets/inventory-of-tax-technology-initiatives.html (accessed on 7 February 2025).