Exploring the impact of AI-driven and blockchain-enabled tax filing systems on smes in the era of technological innovation: A review of benefits, challenges, and adoption barriers

Abstract

The emergence of blockchain technology and artificial intelligence (AI) presents transformative opportunities for tax compliance, especially for small and medium-sized enterprises (SMEs). These technologies promise to enhance tax system accuracy, efficiency, and transparency. However, their adoption is accompanied by significant challenges and barriers. This review analyzes the benefits, challenges, and future prospects of integrating AI and blockchain technologies into tax systems, with a focus on their impact on SMEs. It seeks to provide insights into how these technologies can reshape tax compliance and identify areas requiring further research. The review revealed that AI enhances accuracy and compliance through advanced predictive models and explainable AI, while blockchain ensures transparency and trust with its immutable ledger and smart contracts. Despite these benefits, SMEs face technical and financial constraints, such as high implementation costs and integration complexities. Regulatory and legal challenges, including evolving tax laws and data privacy requirements, further complicate adoption. Additionally, resistance to new technologies and skill gaps within SMEs hinder widespread implementation. Scalability and customization issues also pose significant barriers. In conclusion, AI and blockchain technologies substantially improve tax compliance but come with notable challenges. These technologies promise enhanced accuracy and efficiency for SMEs, yet overcoming barriers related to cost, integration, and regulation is essential for successful adoption. It was recommended that future research should focus on developing SME-specific solutions, addressing regulatory adaptations, and conducting comparative analyses of traditional versus AI-driven tax systems. By tackling these areas, stakeholders can better support SMEs in leveraging AI and blockchain technologies for more effective and transparent tax compliance.