Tax Compliance and Technological Innovation: Case Study Development of Tools to Assist Sales Tax Inspections to Curb Tax Fraud

Tax inspection is a universal phenomenon, but little is known about the use of innovative technology to arm tax auditors with tools in monitoring it. Particularly, tracking goods and commodities to mitigate control risks and avoiding tax fraud and evasion. This study examines a quasi-experiment of development of innovative tools to implement controls aimed at providing the tax inspector with effective artefact to combat tax evasion. Toeing the legitimacy theory, there is an agreement between taxpayers and the tax authorities on adequate compliance with tax legislation. The use of systemic controls by tax authorities is quintessential to track stakeholders’ contract and ensure mandate. The case study is exploratory, using a participatory interventionist approach of a tax auditor. Results indicate that partnership between experienced Tax auditors and IT tax auditors brought several tangible benefits in the developing and monitoring innovative application. It also indicates that OCR supports a data lake to inspectors in which stored information is available standby during inspection. Furthermore, the use of mobile applications instead of searches on mainframes has streamlined the inspection process. The integration of professional scepticism, empathy among users and technological innovation surges independence among tax auditors and ensures focus. The use of a single tool developed according to users’ needs has generated an awareness and a standardized way of working, bringing greater agility to the work and maximising resources. The information necessary for analysis and decision-making is now at the tip of inspectors’ hand on their mobile phones and no longer on the other side of the road in client-server or mainframe applications awaiting consultation. The contribution of this study presents technological innovation developed to guarantee the legitimacy that the legislation, in the case of tax policy, is being complied with through systemic controls. The implication is that this is a peak of Isberg as innovation in the public administration presupposes efficiency. This is the beginning of the process of automating controls, now it is possible to evolve and mitigate frauds of undue appropriation of taxes and undue competition.