The impacts of digitalization of tax administration on the complexity of tax system: OECD countries example

Abstract

The traditional tax system may not support a new business model. The improvement of information and communication technology has changed the business model. The new business models are based on digital technologies and transactions. The traditional tax administration and system fail to tax on profits of digital companies. The digital tax paradigm will inevitably necessitate a change in countries' tax systems. Today, the digitalization of business has played an essential role in the increased tax evasion and loss. Tax administrations have to go to digitization to adapt to these changing business structures. The digital tax administration can create an opportunity to raise tax-income without raising the tax burden. Also, the digitalization of tax administration affects the complexity of the tax system, which is a significant problem for many countries. The complicated tax system causes issues such as loss of tax revenues, injustice. The aim of this study investigates the impacts of the digitalization of tax administration on the complexity of the tax system with the indicators of some OECD countries.