State of use of AI tax systems
According to data from the OECD, the Finnish Tax Administration has been using AI systems and machine learning algorithms since at least 2016.
Based on publicly-available sources, the Finnish Tax Administration uses AI systems in at least two different use cases.
What functions are performed with AI?
- External risk-management (risk-scoring): the machine-learning systems segment taxpayers into categories of risks and selects taxpayers with higher predicted high risks of fraud to devise audit plans and treatment strategies. The Finnish Tax Administration precises that some risk-scoring models are off-the-shelf (COTS) solutions, while others are developed in-house.
- Taxpayer assistance: Virtual conversational assistant ‘Virtanen’ – The chatbot Virtanen is used to assist taxable persons by providing automated guidance for natural persons on the MyTax platform. It can converse with taxable persons, and forward non-solved queries to human tax officials. During 2020, Virtanen had 318,974 conversation and only 18.1% of conversation – 57,873 conversations were forwarded to human agents, hence the chatbot had a rate of success of roughly 81.9%.
What data can be processed by these systems?
The risk-scoring tool analyses the data stored in the Incomes Information System (tulotietojärjestelmästä) and the Business Information System (BIS), two central data systems where all national and international tax information are stored (wages, dividends, benefits, insurances, social contributions).
The data used to develop and used by the chatbot Virtanen is not specified in publicly available sources.
Are these systems regulated by specific norms?
There is no specific legal basis for the use of the two AI tools. According to the Finnish Tax Administration the use of these tools is guided by the principles of the tax assessment procedures and the Tax Administration Act (503/2010). The two tools were implemented on the basis of managerial decisions of the Finnish Tax Administration.
The use of these tools also follows the principles for ethical AI of the Finnish Tax Administration.
