AUTOMATION IN TAX COMPLIANCE: THE ROLE OF ARTIFICIAL INTELLIGENCE IN MODERNIZING TAX SYSTEMS

Abstract

This study was required because of persistent weaknesses in tax administration in Nigeria. These weaknesses include poor revenue generation, manual processing delays, administrative inefficiency, tax evasion, and low use of modern digital tools. These problems reduce the ability of government to generate adequate revenue. They also affect economic and infrastructural development. The general objective of the study was to examine automation in tax compliance. The study also examined the role of artificial intelligence in modernising tax systems in Nigeria. The study adopted an ex post facto research design. The population of the study comprised annual records on tax administration efficiency. It also comprised records on artificial intelligence-related tax compliance indicators in Nigeria. The sample size consisted of 15 annual time-series observations. The period covered 2010 to 2024. The dependent variable was efficiency of tax administration. The explanatory variables were natural language processing, blockchain technology, and predictive analytics technologies. Secondary data were analysed using descriptive statistics. Correlation analysis was also used. Ordinary Least Squares regression was also used. The findings showed that natural language processing had a positive and significant effect on tax administration efficiency in Nigeria. Blockchain technology also had a positive and significant effect. Predictive analytics technologies also had a positive and significant effect. The study concluded that artificial intelligence plays a positive and significant role in modernising tax systems in Nigeria. The study recommended regular training for tax officials and professionals. The training should focus on the use and management of AI technologies. The study also recommended the adoption of blockchain technology. This can improve transparency, security, and integrity in tax transactions. The study further recommended the use of predictive analytics. This can reduce manual errors. It can improve tax assessment. It can also strengthen tax compliance enforcement.