Poland

State of use of AI tax systems

The first mention of the use of AI and machine learning algorithms by the tax administration of the Republic of Poland (NRA) dates back to 2017, with the integration of STIR.

What functions are performed with AI?

Based on publicly-available data, the NRA performs at least three functions with machine-learning:

1. Social Network Analysis (SNA): ‘ARANEUM’ visually represents a network of taxpayers as a system of nodes and vertices. Using graph theory, ARANEUM quantitatively and qualitatively measures connectivity between the nodes.
2. Real-time risk detection ‘STIR’: System Teleinformatyczny Izby Rozliczeniowej detects discrepancies and outlier transactions via data matching. In second instance, STIR attributes a score to taxpayers on the basis of risk-indicators determined by the central ‘clearinghouse’. STIR is used by the Polish tax administration regarding the VAT tax burden of financial institutions and enables the real-time exchange of data between financial institutions, the NRA and the central data warehouse (Central Register of Tax Data). Risk-scores are transmitted daily to the NRA who can then decide to block taxpayers’ bank account for 72 hours (so-called freezing). This period can be extended to 3 months in case of serious suspicions of fraud (extended freezing). M. Rojszczak reports that in the period of January to June 2019, 192 accounts linked to 39 entities were blocked which amounted to approximately 5.5 million euro increased VAT receipts (0.007% of the total VAT gap for that year). A. Bal reports that in 2018, 30.000 accounts were flagged, but only 23 entrepreneurs had their account blocked.

Incidental reports of IOTA and the World Bank mention that the NRA has also been experimenting with nudging tools, to adapt the language of standard communication to taxpayers, based on profiling of taxpayer historical data.

What data can be processed by these systems?

The data used by ARANEUM and by nudging tools is not specified.

STIR captures in real-time and remits data on bank accounts, daily history of transactions, identification data of senders and recipients of goods and services, initial and final balances statements, IP addresses from which account holders logs into their accounts.

Are these systems regulated by specific norms?

The STIR system is regulated by the STIR legislation (System Teleinformatyczny Izby Rozliczeniowej – Tekst jedn. Dz.U. z 2017 r., poz. 1221 ze zm, 3 (4).)

Other systems are not regulated by ad hoc legislative norms.