Tax Authority Using AI? JICA Highlights 3 Key Concerns

JAKARTA, DDTCNews - The emergence of artificial intelligence (AI) is not yet seen as fully replacing the human role in tax administration.

Senior Advisor of the Japan International Cooperation Agency (JICA), Naofumi Kosugi, said AI only assists in calculating the tax that should be due and will not yet replace the role of tax officers.

"Is the human role no longer needed in tax calculations? In my view, that is not the case. To date, AI only processes data provided by humans. Unlike AI, tax officers have an intuition regarding the intentions of taxpayers. For instance, a taxpayer may be concealing certain data. In such cases, tax officers can request supporting documents," said Kosugi at the International Tax Conference 2026, as cited on Thursday (17/9/2026).

Although AI cannot yet replace tax officers, Kosugi nonetheless encouraged tax authorities to provide AI tools to support the routine work of tax officers.

According to Kosugi, there are 3 matters that tax authorities must pay attention to when using AI. First, the protection of taxpayer privacy and data security. Kosugi is of the view that taxpayer data must be protected with robust encryption to prevent it from being accessed by external parties.

Second, AI transparency and accountability. Kosugi noted that AI algorithms must be continually evaluated in order to eliminate bias within such systems.

Third, the risk of AI hallucinations. Kosugi noted that AI frequently provides incorrect information that is not grounded in fact. Tax authorities must therefore train their employees to guard against such hallucinations.

"If we provide misleading information to taxpayers based on AI hallucinations, this will give rise to serious issues and disputes in the future," said Kosugi. (rig)