Can algorithms expose tax fraud?

Ignacio González, Agencia Estatal de Administración Tributaria
Alfonso Mateos, Universidad Politécnica de Madrid
Adapted by: Eli Vivas and Carina Bellver (StoryData)

For administrations to be able to optimise the design of the two components of any tax policy – revenues and expenditures – they need to know the distribution of wealth, and also to identify the natural and legal persons who possess it, in order to prevent tax evasion. They use algorithms, new big data techniques and artificial intelligence to detect, with a precision that would have been unimaginable only a few years ago, both the wealth that some endeavour to conceal under a network of companies and the various tax fraud mechanisms.
Key points
  • 1
       Algorithms detect hidden wealth, misuse of aggressive fiscal engineering, money laundering and fraud.
  • 2
       The use of algorithms has enabled the Spanish Tax Administration Agency ('Agencia Estatal de Administración Tributaria' or AEAT) to identify more than 170 million undeclared family relationships on top of the 87.6 million family relationships declared in personal income tax and inheritance tax. In this way, the total number of family relationships that can be used to detect how companies are controlled is at present nearly 258 million.
  • 3
       On the basis of all tax returns, the total wealth of all Spain’s taxpayers had been estimated at 3.6 trillion euros. The use of algorithms has made it possible to identify the real owners of more than half a trillion euros more, concealed behind networks of enterprises.
  • 4
       Algorithms have revealed that the richest 6% of the Spanish population possess part of their wealth indirectly, through a network of enterprises that are not listed on the stock market. This group comprises 2,532,964 citizens whose wealth is much greater than would appear from their holdings in these companies.

Classification

Auhors

Ignacio González , Agencia Estatal de Administración Tributaria
Alfonso Mateos , Universidad Politécnica de Madrid
Adapted by: Eli Vivas and Carina Bellver (StoryData)

Tags

Subject areas

Related content

Infodata

Digital Economy and Society Index

Spain stands at the head of the countries of the EU-27 in the global computation of digital society indicators (connectivity, Internet use, etc). Portugal, however, is situated at the tail end.

Infodata

Inequality in income distribution

The redistributive effect of social transfers is lower in Spain than in the EU-27.

Infodata

Level of economic development

The GDP in purchasing power standards allows a more exact comparison of the level of economic development between countries.

Report

The divide between retro-capitalism and turbo-capitalism

Globalisation and the rapid technological and digital transformation has resulted in two coexisting economic models: “turbo-capitalism”, which works with international logic, and “retro-capitalism”, which adopts the old logic of protectionist capitalism.

Report

The redistributive effects of the system of taxes and transfers in Europe

We analyse possible reforms, considered in a pre-covid-19 scenario, for improving the welfare state in Spain and its redistributive capacity in relation to the European average.

You may also find interesting

Interview

“Diversity makes science better”

“Diversity makes science better”

Science Social Inclusion

Elizabeth Rasekoala, President of African Gong, defends the importance of science as a tool for social transformation and talks to us about the need for acquiring basic scientific literacy in order to be able to think critically.

Article

Gambling addiction in adolescence: betting, technologies and drug use

Gambling addiction in adolescence: betting, technologies and drug use

According to this study, the most popular form of gambling among teenagers is sports betting, and there is a higher level of online gambling addiction among boys.

Article

From Moderate to Hyperconnected Users: Six Smartphone Use Profiles and Their Impact on Personal Well-being

From Moderate to Hyperconnected Users: Six Smartphone Use Profiles and Their Impact on Personal Well-being

What use are young Spaniards making of mobile phones? This study indicates that 19% are hyperconnected, showing difficulties in controlling the use of this technology.