Leveraging Artificial Intelligence (AI) and Blockchain for Enhanced Tax Compliance and Revenue Generation in Public Finance

Abstract

This study investigates the transformative potential of Artificial Intelligence (AI) and blockchain technologies to enhance tax compliance and revenue generation within public finance. In response to mounting challenges governments worldwide face in maintaining tax compliance and achieving efficient revenue collection, AI and blockchain present promising, forward-looking solutions. Using a qualitative review of secondary data, this paper evaluates the primary applications of AI and blockchain, such as automated compliance monitoring, fraud detection, real-time auditing, and secure transaction processing. The findings suggest that AI's capacity for real-time analysis of vast datasets, coupled with the transparency and immutability provided by blockchain, can significantly elevate tax compliance rates and reinforce public trust in financial systems. Furthermore, integrating AI and blockchain paves the way for innovative policy enforcement and informed decision-making, contributing to a more efficient and transparent public finance system. Nonetheless, substantial challenges persist, including those associated with infrastructure development, regulatory frameworks, and ethical considerations. The paper recommends implementing targeted pilot programs, developing robust regulatory frameworks, enhancing workforce training, and investing in continued research on advanced applications. This study thus lays a foundation for policymakers to leverage the potential of AI and blockchain in transforming public financial management, moving toward a more resilient and transparent future in public finance.