Is Artificial Intelligence a game-changer in the UK’s battle against tax evasion?
How is AI being utilised in combatting tax evasion? Harley Thomas, forensic accountant at MKS Law, investigates.
Harley Thomas, Forensic Accountant at MKS Law, writes exclusively for the IFC Economic report
Like many countries, the UK faces the persistent challenge of tax evasion, the illegal act of deliberately avoiding or underreporting taxes owed to the government.
Tax evaders have used traditional offshore jurisdictions and, in the last decade or so, turned to up-and-coming financial centres such as the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) in the United Arab Emirates (UAE).
These jurisdictions are often characterised by low or no taxes and a high degree of financial secrecy, in addition to favourable investment holding and asset protection laws. They have long provided a haven for individuals and corporations looking to evade their tax obligations.
However, the advent of Artificial Intelligence (AI) has the potential to be a game-changer in the battle against this form of financial crime. But is it truly the difference maker?
“In my view, the full potential of AI in combatting tax evasion is always going to be hampered by geopolitical semantics.”
As tax and regulatory bodies begin to increasingly use AI tools, so too will individuals seeking to evade taxes. Tax evaders increasingly leverage AI to exploit loopholes, utilising complex algorithms to obscure transactions, fabricate identities and manipulate financial records.
AI’s role in all this remains significant yet constrained: its full potential will only be realised when integrated into a broader, cooperative strategy that includes transparency and legal reforms. Until then, AI offers promise, but is not an all-encompassing silver bullet for combatting tax evasion.
