New Technologies in International Law / Tymofeyeva, Crhák et al.

By looking at the similarities and differences, it’s evident that the term serves different functions for different international bodies, and the purpose may be for example analytical, a policy formulation or an aid allocation. For example, in the United Nations system, there is no official definition distinguishing developing and developed countries or areas. Initially, these categories were created for statistical ease. In December 2021, following discussions with various international statistical organizations, the UN removed the categories. This flexibility acknowledges that the classification as a developed or developing region is often a sovereign decision of a state. 354 The UN also recognizes the designation of least Developed Countries (LDCs) based on criteria that include low income, weak human assets, and economic vulnerability. 355 When choosing specific examples of technology implementation in tax administration, this article has not followed one specific definition but rather considered a broader context of the country development and a value of the data available. 1.2 Specific Situation of Developing Countries Both developing and developed countries have tax, technological, and data management concerns, however developing countries may struggle with basic functions like audits and tax collection, which are exacerbated by international tax standards and digital taxes. 356 Such governments often find it difficult to enforce tax compliance, in part because they do not have accurate records of taxpayer earnings. 357 While issues such as privacy or corruption are common to both developing and developed countries, they differ in relative importance. 358 Currently, states have a significant opportunity to leap forward to advanced technology-based systems, which can result in increased revenue and tax base expansion, more effective resource use, and the ability to complete more risk assessments using more sophisticated tools. 359 However, while digital solutions can streamline processes, they demand higher skills for effective management. Lack of ability on the taxpayer side is also a concern, particularly in developing countries, resulting in low levels of compliance, particularly with more complex instruments like VAT. A choice of how to allocate scarce resources needs to 354 UN Statistics Division, Methodology. Standard Country or Area Codes for Statistical Use (M49), accessed 20 October 2023. 355 UN Department of Economic and Social Affairs, About Secretariat of the Committee for Development Policy accessed 25 October 2023. 356 Asian Development Bank, (2022), Launching a Digital Tax Administration Transformation: What You Need to Know (1st ed.), Asian Development Bank Institute, p. 24. 357 Ali M, Shifa AB, Shimeles A and Woldeyes F, ‘Building Fiscal Capacity in Developing Countries: Evidence on the Role of Information Technology’ (2021) 74(3) National Tax Journal 591. 358 Bird R and Zolt E, ‘Technology and Taxation in Developing Countries: From Hand to Mouse’ (2008) 61 National Tax Journal 791, p. 2. 359 OECD, 2023 Progress Report on Tax Co-operation for the 21st Century. OECD Report for the G7 Finance Ministers and Central Bank Governors (2023) < https://doi.org/doi:https://doi.org/10.1787/d29d0872-en>, p. 28.

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