Tax Monitoring and Transactional Taxation: Two Approaches to Digital Transformation of Tax Administration

This research focuses on the subject of the digitalization of tax administration through the lens of the “Tax Administration 3.0” framework, exploring tax monitoring and transactional taxation as models for a digital tax environment. This project aims to examine the commonalities and divergences between the two leading frameworks for creating a digital tax system. The models’ functional role and future potential were established, marking the shift from declarative tax administration to integrated, proactive, and automated systems for tax compliance. This paper looks into the OECD’s methods for digitally transforming tax administration by integrating tax processes into taxpayers’ natural systems. The research looked at tax monitoring as a way to achieve cooperative control. It also explored transactional taxation as a method for integrated and automated tax administration. Considering both scientific and practical reasoning, the research suggests that tax monitoring and transactional taxation should be viewed as distinct digital functions rather than opposing concepts: With a focus on complex corporate setups, the first model delves into the legal analysis of business transactions; the second option concentrates on large, uniform transactions needing standardized primary digital data and algorithms for tax computation. The study’s authors concluded that the progression of digital tax administration will result from a reshaping of their domains and a steady increase in the scope of both models, not a mutual exclusion.

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