Modern technologies, including artificial intelligence (AI), are increasingly transforming the way tax administrations operate around the world, and this trend is becoming more evident in Serbia as well.
“When tax administrations are dealing with vast amounts of data from e-commerce and online platforms, random audits no longer produce good results. This is precisely where artificial intelligence comes in, helping to quickly identify high-risk cases. As a result, inspectors can focus their attention where the likelihood of irregularities is greatest, significantly increasing the effectiveness of audits,” said EU expert Markus Drost at a workshop held from 12 to 15 May at the Serbian Tax Administration.
The workshop focused on the impact of the digital economy on the work of tax administrations.
The main topics included current EU VAT trends, risk management, and digital audit tools, with a key message that tax administrations need to adapt their working methods to keep pace with the growth of the digital economy. In practice, this means relying less on traditional audits and more on automated data analysis.
For Serbia, which has already taken important first steps through the introduction of e-invoicing, this means further development of digital tools as well as changes in the way the Tax Administration operates. Data analysis, automated controls, and international information exchange are expected to play an increasingly important role.
According to Drost, the European Union is intensively working on the digitalisation of the VAT system, with particular attention being given to online platforms, which in certain cases become responsible for collecting and remitting VAT instead of the individual sellers operating through them. At the same time, he stressed that the use of AI in tax systems must be subject to clear rules and limitations and that decisions affecting taxpayers cannot be left entirely to algorithms.
“Every decision must be traceable and explainable, while AI often remains a ‘black box’ where it is not always clear how a conclusion was reached. For that reason, tax assessments for citizens or businesses cannot be generated and issued solely by an AI system. A human being must always perform the final review. The goal is not to replace inspectors with technology, but to help them obtain relevant information more quickly and focus on the most complex cases,” Drost explained.
A particular emphasis of the workshop was placed on hands-on learning through real-life case studies and simulations of tax audits. Participants highlighted this as the most valuable part of the training, as it enabled them to better understand audit procedures and decision-making in complex situations.
Drost explained that practical exercises play a crucial role because they connect theoretical knowledge with real-world situations that tax officials encounter in their daily work.
“Through simulations, employees do not only learn the rules. They develop analytical thinking and learn how to make sound decisions, which gives them greater confidence when dealing with complex cases. This type of learning is far more memorable than traditional classroom-based lectures,” he said.
The workshop was held within the program “EU Support to Public Finance Management,” funded by the European Union under IPA 2021 and implemented by the United Nations Development Programme (UNDP), in partnership with the Center of Excellence in Finance (CEF) and the Ministry of Finance of Slovakia.