Tax Administration Toward Digitalization in the COVID-19 Environment—Case Study Bosnia and Herzegovina

Abstract

TheE-tax administration COVID-19 pandemic, as an unprecedented global health and economic crisis, has shaken digital resilienceDigital resilience in general, and on the government side in particular. Pandemic circumstances have caused a slowdown in economic activity and, at the same time, introduced us to the momentum of accelerated digitalization. Among other things, economic policy makers had two key economic policies, monetary and fiscal, at their disposal, in order to ensure the necessary stabilization of the economy and amortization of the negative consequences of the crisis on business activities. Speaking of fiscal policy, the special burden of the crisis was in the field of ensuring the integrity of the tax system and yielding tax revenue. In this context, tax administrations have faced, on the one hand, the potentially accelerated digitization of work and, on the other hand, the pressure of having to ensure the highest possible degree of tax complianceTax compliance in a situation that, due to its characteristics, presented an additional risk for tax fraud. The situation has become more complicated in developing countries, such as Bosnia and Herzegovina, which has a deep-rooted bureaucratic system and fights hard for public trust while trying to solve the problem of collecting enough tax revenue for the basic functions of the state. This chapter examines how the COVID-19 pandemic affected the process of digitalization of tax administrations with the specific aim of determining whether Bosnia and Herzegovina, as a developing country with a commitment to membership in the European Union, has seized momentum and accelerated the degree of digitalization of tax administrations, especially the Indirect TaxationIndirect taxation Authority. In order to meet the set research goal, the first part of the chapter will present a theoretical framework of the economic analysis of the digitalization of the tax administration. The second part of the chapter will provide a comparative analysis of the situation and perspectives of digitalization of the tax administrations from 32 member administrations based on the research of the Organization for Economic Cooperation and Development published in 2021 with special reference to the impact of the pandemic. In the third and last part of the chapter, based on the empirical research and desk analysis, the author seeks to answer the fundamental research question of whether the COVID-19 pandemic accelerated the process of digitalization of tax administration in Bosnia and Herzegovina in which the stage of digitalization is generally low and which can be seen as a sludge in the digitalization process.