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New AI-powered software deployed to catch tax evaders

New AI-powered software deployed to catch tax evaders

The IRS will introduce computer software that automatically alerts authorities when a person’s or company’s declared income doesn’t match their accumulated assets, Treasury Secretary Clyde Caruana announced Tuesday.

This will make it much easier and faster for authorities to immediately detect and act on tax evasion, Caruana said.

The IT software, already in use in the UK, New Zealand, the Netherlands, Ireland and Canada, will analyze VAT returns by the end of this year and all other forms of tax within the next three years.

The computer program performs daily analyzes of the assets that people and companies own and matches this with the income they declare.

It is an advanced statistical analysis system (SAS) that uses artificial intelligence to pull data from various registers and bank accounts to assess the individual’s cash deposits and illiquid assets such as real estate, land, vehicles and boats in an effort to the tax authorities record income and tax levies much faster and more efficiently.

The software, which will cost the government €3 million, is part of a series of measures announced in a comprehensive strategy for the tax and customs administration launched on Tuesday.

‘We need a culture change’ – Caruana

It marks the beginning of a much-needed culture change and will change the way tax investigations are conducted, Caruana said. Gone are the times when people are investigated simply because someone else reported them anonymously, or because they were randomly selected and investigated.

Instead, the software performs a quick, daily analysis of the population and pulls together work that usually takes weeks and months to complete in minutes.

“I understand that some people will not appreciate this effort. They will even say that it is an attack on business and that I hold a grudge against business people or that I am trying to suppress economic growth,” said Caruana.

“This is absolutely not true. As finance minister, I can never be against economic growth, because it is the driving force of employment and wealth for the people. But I am not in favor of crony capitalism, where business people feel that paying tax is a burden.” , instead of a duty.

“I want to nurture an economy that rewards creativity over the connections of the individual. I want a country where perseverance prevails over power, inclusiveness over exclusiveness, and where we strengthen justice and reduce inequality, and people who work honestly over people who attempt to undue influence for personal gain.

“I want to see a system that leads to progress that everyone can enjoy, not just a few. These are the concepts upon which we build the strategy we’re announcing today, because the people deserve better.”

A strategy for tax and customs administration was launched at the Mediterranean Conference Center on Tuesday. PHOTO: Chris Sant Fournier.

‘Taxes are 85% of government revenue’

For a long time, the country dragged its feet on tax collection enforcement, but a culture change is needed, Caruana said, because taxes make up 85% of government revenue.

“When it came down to the pandemic and the war in Ukraine, everyone turned to the government to allocate millions of euros to save families and businesses, which is why taxes must be paid to put the government in a strong financial position .”

Caruana also noted a positive increase in people calling to self-regulate. Last year, the IRS recorded a 42 percent increase in tax settlements, he said. Tax agreements allow individuals and businesses with tax arrears to pay their dues over an agreed period of time.

“It was no coincidence that the tax authorities collected 240 million euros more in VAT last year,” said Caruana.

“It’s because the economy is growing, but also because the IRS is stepping up its efforts to collect everything it owes.”

Speaking at the launch of the strategy on Tuesday, which also included representatives from the International Monetary Fund, tax commissioner Joseph Caruana said the strategy aims to make tax collection faster, simpler, data-driven, more effective, more efficient, more personalized and easier to use. friendly.

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