Turkey's Treasury and Finance Ministry plans to leverage AI technology to combat tax evasion, enhance audit efficiency, and detect fraud, particularly in high-risk sectors like construction. By employing predictive and advanced analytics and tools for tax and customs analysis, Turkey aims to improve its tax collection rates and close the compliance gap with other OECD countries. AI will automate and streamline data analysis, helping authorities identify suspicious patterns and discrepancies more effectively than traditional methods
Turkey Embraces AI and Machine Learning to Tackle VAT and Tax Fraud
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Turkey
Author: Stefan Ditrih
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Fiscal subject related
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Content accuracy validation date:
18.10.2024
Content accuracy validation time:
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Turkey is gearing up to harness the power of artificial intelligence (AI) in its battle against tax evasion, following in the footsteps of other countries such as Austria. The Turkish Treasury and Finance Ministry recently announced this strategic initiative, aiming to employ AI technologies to audit businesses more efficiently and detect tax avoidance and fraud. This move is part of a broader effort to enhance the country's tax collection capabilities, which currently lag behind other OECD nations.
A significant number of Turkish businesses report little to no profits, with more than half declaring either losses or minimal gains. This trend raises concerns within the Ministry, particularly in sectors like construction that are prone to large-scale tax fraud schemes. To address these issues, AI will be deployed in various capacities, including:
- Predictive Analytics: AI models will be used for data pre-processing, enabling authorities to anticipate patterns of fraud or tax evasion.
- Advanced Analytics: Enhanced analytical tools will assist in interpreting more complex tax reporting data.
- Tax Analytics: These tools will consolidate a wider range of tax data, such as salary reports, for more comprehensive reviews.
- Customs Analytics: AI will aid in risk profiling, support customs-related tasks, and help track down international fraud cases.
Other countries have successfully implemented AI-powered measures to combat VAT fraud, and Turkey hopes to achieve similar results. The Ministry has highlighted that advanced technology can significantly boost compliance and detection rates, allowing auditors to uncover wrongdoing more effectively than traditional methods.
AI offers a revolutionary solution to this problem. By analyzing vast quantities of data from tax filings, financial records, and even online activity, AI algorithms can identify suspicious patterns that would be nearly impossible to detect manually. For example, AI systems could flag discrepancies between a company’s declared earnings and its market presence or highlight unusually high expenses relative to industry benchmarks. Automating these processes enables tax authorities to conduct more thorough and accurate audits, minimizing opportunities for tax evasion.
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