The Digital Transformation of Tax Systems - Progress, Pitfalls and Protection in a Danish Context

Abstract

The authors examine possibilities with and challenges in using digital tools to obtain tax simplification and to improve tax assessment, collection, and transparency. Hence, the main objectives of the article are, from a legal perspective, to shed additional light on the relations between tax administrations and taxpayers in an increasingly digitalized world and to discuss how this development may influence taxpayers’ rights and the overall efficiency of tax systems. In doing so, practical experiences—incurred in Denmark during its journey from a paper-based and manual tax administration process towards a more digitalized one—are analyzed. Against this background, it is concluded that many states around the world, including Denmark, have come a long way in making tax processes more smooth and efficient through the use of digital tools for the benefit of both taxpayers and tax administrations. However, at the same time, global as well as Danish experiences clearly show that states, in their pursuit to digitalize tax administrations further, need to take appropriate measures into consideration in order to ensure the legality and transparency of the digital tax administration processes.

Keywords: Digitalization, tax rights, transparency, tax administration

JEL Classification: K34, K40, K23