Three common themes emerged at these public finance, customs, and trade events.

1. AI is driving smarter, faster public sector services

AI is reshaping public finance, trade, and tax administration. At the 2025 International Trade and Trade Finance in the Digital Economy Conference, leaders explored how AI is driving productivity, resilience, and sustainable growth. With only 2–3% of global trade currently digitalized, the opportunity for efficiency gains is immense—a single electronic document can save billions in direct costs and create even more value in global trade.¹

AI-powered solutions are already delivering measurable results:

• Frictionless borders and trusted trader onboarding
• Empowered customs officers with real-time data and mobile tools
• AI-based risk management for fraud detection and compliance
• Sustainable logistics that reduce carbon footprints and improve efficiency

These capabilities are already in use—reducing goods clearance times by up to 30% and cutting document review durations by 90%.²

• The General Directorate of Customs of the Dominican Republic (DGA) recently modernized its back-office and customer service operations using Microsoft intelligent cloud solutions, reducing some tasks from seven days to just 24 hours.
• The Australian Trade and Investment Commission (Austrade) uses technology innovation to access the latest data, promote new markets, suggest targeted opportunities, and invite clients to events.
• CSX uses AI and low-code automation to help customers track freight, manage shipments, and access rail logistics services through its online portal.

2. Building inclusive public services through collaboration

Transformation in public finance is a shared journey. The OECD Forum on Tax Administration’s Working Group on Tax Administration 3.0 highlighted the power of taxpayer ecosystem cooperation. Governments and industry partners are working together to build trusted, interoperable systems that allow:

• Secure data collaboration across agencies and sectors
• Quantum-safe digital identity and verifiable credentials
• Privacy-preserving technology with confidential computing
• Cybersecurity and access
• Contextual intelligent automation with AI agents

This collaborative mindset is driving the next phase of digital transformation, ensuring that modernization efforts are resilient, inclusive, and aligned with the needs of all stakeholders.

3. Putting taxpayers first with data-powered services

The shift toward taxpayer-centric, data-driven services is another recurring theme. Agencies are using real-time insights, digital identity, and privacy-preserving technologies to deliver:

• Personalized taxpayer experiences and simplified compliance.
• Outcome-driven investments that improve service quality and transparency.
• AI copilots that empower auditors, analysts, and citizens.

Examples abound: Estonia’s Bürokratt solution simplifies taxpayer experience with AI-powered natural language interactions, while the United Kingdom’s Department for Environment, Food, and Rural Affairs uses data-driven budgeting to enhance financial operations. In collaboration with the Inter-American Center of Tax Administrations (CIAT), Microsoft has helped build intelligence tools that detect anomalies and empower tax agencies to become more efficient.

What’s next for AI in public finance transformation

As we prepare for the 6th Annual International Conference on “Real-Time Economy Development and Tax Administrations,” the focus is on interoperability, data trust zones, and AI-powered tax ecosystems. Microsoft will be contributing to this dialogue and sharing how our technologies are using real-time data services, secure collaboration, and next-generation AI agents for public finance agencies.

Across all these engagements, one message is clear: the future of public service is collaborative, intelligent, and taxpayer-first. At Microsoft, we’re committed to enabling this transformation through technology, partnerships, and a deep understanding of government missions.

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¹ McKinsey & Company, The multi-billion-dollar paper jam: Unlocking trade by digitalizing documentation, October 4, 2022.

² United Nations Conference on Trade and Development (UNCTAD), Advancing Digital Transformation: Global Insights into the Digitalization of Trade Procedures, December 29, 2023.

The post From vision to impact: Advancing public finance transformation through AI and ecosystem collaboration appeared first on The Microsoft Cloud Blog.

To make every budgeted dollar count towards economic growth, finance leaders should shift towards informed budgeting. Informed budgeting uses performance metrics, citizen needs, and economic forecasts to allocate resources more effectively. Here’s how this approach can benefit public finance agencies and economies:

• Informed decision making: Get real-time insights into budget requests and the impact of budget allocations across government programs, agencies, and the broader economy.
• Economic resilience: Ensure budgets are adaptable to shocks and capable of sustaining critical services during crises.
• Financial inclusion: Allocate funds and programs to underserved communities and businesses to ensure that growth is widely shared.
• Cross-agency collaboration: Break down silos between departments to share data and insights for coordinated, strategic investments.

Traditional budgeting approaches are no longer sufficient. Many government finance systems still operate in analog silos, where each department plans independently, making it difficult to address outcomes that span multiple sectors. Legacy systems also limit agility. Analysts spend significant time gathering supporting information and manually modeling accurate forecasts or quickly simulating the reallocation of funds in response to changing economic conditions. The result can be budgets that are misaligned with real-world needs and policy goals or that lack timely impact.

To deliver proactive, transparent, and data-driven budgeting to the public, budget and treasury agencies need to modernize budget planning and execution. Microsoft collaborates with governments globally to unlock the new opportunities and capabilities that AI advancement bring towards the goal of economic growth.

Informed decision making

Informed decision-making is critical for public finance agencies because it ensures that budget planning and execution are grounded in real-time data and insights. This approach allows for more accurate forecasting, prioritization of resources based on actual needs, and strategic allocation that maximizes impact across individuals, communities, and businesses—while also enhancing transparency, accountability, and public trust in financial governance.

• Advanced data analytics and AI for forecasting: By using AI, agencies can analyze historical economic data and run ‘what-if’ scenarios with greater accuracy. The following solutions allow officials to proactively adjust plans rather than react.
  • Predictive analytics: Forecast economic trends and simulate policy impacts.
  • Natural language processing: Analyze public sentiment and policy documents.
  • Scenario modeling: Evaluate different policy trade-offs.
• Real-time reporting and analytics: Modern reporting tools like Microsoft Power BI and Azure data analytics let agencies to build live dashboards that track spending against KPIs. Live dashboards provide near-real-time visibility into fund usage and achieved results, allowing budget officers to monitor allocations and correlate spending with economic indicators for timely adjustments. Outcome-based budgeting becomes possible, linking allocations to metrics such as gross domestic product (GDP) growth or poverty reduction. This allows continuous feedback between spending and impact.

Economic resilience

To foster economic growth and resilience, government budgeting must become more predictive, agile, and outcome-focused. Leading agencies are transitioning from static annual budgets toward dynamic forecasting and continuous re-planning with modern technologies.

• Integrated budget management systems: Modern cloud-based enterprise resource planning (ERP) systems like Microsoft Dynamics 365 Finance provide end-to-end budgeting, accounting, and reporting on a single platform. This integration allows seamless data flow from planning to execution to audit, reducing errors and manual work.
• Process reengineering and automation for execution: Automation ensures that budgets are executed efficiently. With low-code automation, organizations are empowered to improve fund distribution, grants management, and procurement, allowing money to move out faster and more accountably.
• Cultural change: Transitioning from annual, siloed cycles to agile, collaborative budgeting requires a cultural shift. Agencies may need to update regulations for mid-year adjustments and foster a culture of data-driven decision-making and interdepartmental cooperation. Pilot projects can demonstrate quick wins and build support.
• Upskilling the workforce: Technology adoption is effective only when staff can interpret data insights and adapt policies as needed. Agencies should invest in training finance professionals in data science, AI, and modern systems. For public finance agencies, Microsoft offers training for enhance public sector services with generative AI, Microsoft Dynamics 365 Finance, and finance-specific use cases with Microsoft 365 Copilot.

Financial inclusion

Finance agencies are expected to allow access to funds and programs while balancing inclusivity and reach across communities and businesses. To achieve this, they need insights into real-time needs and gaps. They must establish streamlined access as well as strong eligibility checks so they can move resources securely, effectively, and quickly.

• AI-powered taxpayer-centric models: Agencies can better understand the diverse needs of individuals and businesses by mapping life events to financial touchpoints. Collaborating with banks and financial technology companies creates a seamless service delivery. Agencies that conduct gap assessments with central banks and regulators can identify underserved populations and tailor inclusive strategies.
• Streamlined intake and eligibility checks: Service interactions can be simplified through unified customer accounts and identity systems, and low-code automation. This allows instant access through intelligent portals and virtual assistants while also accelerating decision-making with automated eligibility checks.
• Transparency and citizen engagement: Informed budgeting involves engaging the public by transparently sharing plans and results. Online portals allow citizens to view allocations and provide feedback, leading to better-aligned projects and increased trust.

Cross-agency collaboration

Achieving economic growth through budgeting requires collaboration across all government sectors—not just finance ministries. For example, a nationwide upskilling program might involve the treasury for funding, the education ministry for implementation, and the labor department for outcome tracking. If departments operate in silos, programs can falter.

• Unified data sharing: Modern platforms allow departments to securely share data and insights. Cloud-based data hubs and collaboration tools such as Microsoft Intelligent Data Platform and Microsoft Teams allows for a consolidated view of economic initiatives. Planners can evaluate performance across all government sectors to inform future funding decisions.
• Cross-functional budget task forces: Some governments establish interagency teams to oversee major spending initiatives. These teams use digital project management and analytics tools to coordinate efforts. Collaboration ensures that support reaches the right beneficiaries at the right time, enhancing inclusion and growth.
• Security and compliance: Government financial data and cloud solutions require rigorous security and privacy, especially when data is shared across departments. Microsoft’s public sector cloud services emphasize compliance, identity management, and data protection, giving public finance officers confidence in the security and trustworthiness of the systems they use.

The impact of AI on informing budgeting

Government budget planning and execution is a structured process that ensures public resources are allocated effectively and transparently. From the first step to the last, the process and the people can be supported by AI.

Strategic planning and policy formulation are the initial steps where governments define macroeconomic goals and align departmental plans with national priorities. AI can enhance this phase through predictive analytics, scenario modeling, and natural language processing to analyze trends and public sentiment.

During budget preparation, ministries and agencies submit proposals that central authorities review and consolidate. AI streamlines this step by automating data validation, prioritizing projects using decision-support algorithms, and assisting users with chatbots.

During the legislative approval phase, AI tools can summarize complex documents, analyze stakeholder sentiment, and simulate the impact of proposed amendments. Once the budget is approved, execution involves fund disbursement, procurement, and project implementation. In this phase, AI supports robotic process automation, fraud detection in procurement, and real-time monitoring dashboards.

Monitoring and reporting follow, where AI detects anomalies, automates reporting, and uses geospatial tools to track project delivery. In the audit and evaluation phase, AI aids in text mining audit reports, conducting forensic analysis, and assessing program outcomes.

Throughout all stages, AI enhances transparency, interoperability, and capacity building, making the budgeting process more efficient, accountable, and responsive.

Success stories: Informed budgeting in action

• City of Columbus (US): Columbus modernized its financial management by adopting Dynamics 365 to handle its complex finances. This system oversees more than 150 departmental budgets, 3,500 capital projects, and 9,000 forecast positions with automated workflows and multi-level approvals, ensuring transparency and compliance. The city’s approach serves as a model for others upgrading legacy systems.
• City of Redmond (US): Redmond used Dynamics 365 to streamline operations and enhance financial visibility across 500 departments and 82 budget owners. The upgrade created automated workflows, centralized purchasing and accounts payable, and real-time data access. The city identified $3.6 million in savings and filled a $6 million public safety levy gap.
• Municipality of Breda (Netherlands): Breda modernized public service delivery by adopting Microsoft Copilot to address staffing shortages and heavy workloads, empowering 3,600 employees to focus on complex policy issues. Breda piloted more than 25 AI-powered use cases including document drafting, email management, and multilingual migrant support—saving up to 28 hours per employee monthly.
• Somerset Council (UK): Somerset Council used Dynamics 365 to unify five previously separate councils under a single compliant system, replacing 50 disconnected applications and four enterprise resource planning systems—all within 10 months. The council now oversees financial operations across 5,000 staff and multiple service areas with automated workflows, centralized data, and integrated reporting.
• Johor Corporation (Malaysia): JCorp used Microsoft solutions to unify its diverse business segments, eliminate silos, and accelerate data-driven decision-making across more than 500 users and more than 100 AI use cases. The organization centralized data, streamlined collaboration, and embedded AI into workflows for real-time insights, automated documentation, and scenario planning.

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Informed budgeting is transforming public finance from a reactive exercise into a proactive strategy for growth. By using data, cloud technology, and teamwork, governments can ensure public funds drive outcomes that lead to stronger economies and greater public trust.

The journey is ongoing. Microsoft and our partners are ready to assist your organization in this process. To learn more about how our technology and expertise can help your agency implement informed budgeting, visit the Microsoft for public finance page today.

The post Modernize public finance with AI: Informed budgeting for economic growth appeared first on The Microsoft Cloud Blog.

Across industry sectors, 80% of finance teams report challenges in their ability to do strategic work beyond operations.¹ For public finance organizations, this is made even more difficult due to the pressures unique to government: budgetary constraints, revenue volatility, public demands for transparency, complex regulations, and workforce challenges, to name just a few.

Modernization plays a major role in helping public governments navigate this landscape. New cloud and AI solutions are helping governments reignite economies by simplifying taxation, improving budgeting, and mitigating fraud and corruption. Now, a new level of impact is at hand with the Microsoft 365 Copilot for Finance, an AI-powered, role-based Copilot agent designed to help government agencies accelerate time to business impact. Copilot for Finance is now in public preview and will be delivered in the coming months.

Helping government finance organizations take full advantage of this new opportunity is core to our work at Microsoft for public finance, where our focus is to help governments achieve more through technology.

How Copilot for Finance empowers finance professionals in new ways

Imagine a typical day for a budget officer or a procurement operations manager. These professionals spend hours each day reviewing emails, preparing for meetings, and analyzing data. Despite their best efforts, much of their time is consumed by drudgery—essential tasks that demand complete and precise attention—time that is not available for more strategic (and satisfying) work.

Generative AI has already proven effective in easing the burden, with Microsoft 365 Copilot delivering significant productivity gains in just its first year.² Users reported it made them 29% faster in doing such time-consuming tasks as searching, writing, and summarizing.² The power to explore financial data with natural language, reduce time spent on financial processes, and turn raw data into presentation-ready visuals and whitepapers—all integrated into everyday productivity applications such as Excel, Outlook, and Microsoft Teams—is truly transformative for public finance.

Copilot for Finance extends the core power of Copilot with new features designed specifically to enhance financial operations. By drawing on a complete range of financial data sources, including enterprise resource planning (ERP) systems and the organization’s complete Microsoft 365 data, it’s built to help professionals and teams accelerate their impact by speeding time to financial insight.

Here at Microsoft, we’ve seen the value firsthand. A group in our treasury and financial planning and analysis team piloted Copilot for Finance to automate and simplify the data reconciliation process and improve productivity. The results were impressive. The team realized a 22% cost savings in reconciliation tasks, reducing what used to take one to two hours down to only about 10 minutes.³

4 important benefits of Copilot for Finance for public finance

Copilot for Finance is designed to be an everyday assistant for finance professionals to reimagine how they operate and serve the public. Here are four ways it aims to deliver new benefits to improve cost as well as impact.

1. Optimizing processes

Copilot for Finance helps automate many labor-intensive tasks that finance professionals typically do manually, such as data consolidation, verification, and updating financial data across systems. This can significantly reduce the time and effort required, freeing people to do more strategic work. For example, during financial period close, Copilot for Finance can streamline data reconciliation by using intelligent data structures comparisons and guided troubleshooting in Excel. It analyzes results with an auto-generated report summary that highlights discrepancies and provides recommendations and actions to resolve them. This not only speeds up the reconciliation process but also helps ensure higher accuracy and reduces the risk of errors.

2. Controlling expenses

Beyond saving time and money with optimized processes, Copilot for Finance helps organizations focus better on expense control with AI-powered reconciliation and data set preparation. By using new methods of cost variance identification, analysis, and reporting, teams can find more opportunities to save costs, earlier than they might have otherwise, thanks to variance analysis and insights drawn from myriad supplementary data sources.

3. Improving collections

Copilot for Finance gives public finance professionals new ways to work with taxpayers and drive productive communications that lead to better collections and reporting in less time. Drawing on information from multiple sources about an individual’s or organization’s status, a collections manager can quickly review payment history and any issues or details relevant to collection activities. Generative AI summarization can also expediate communication and reporting on multiple fronts.

4. De-risking revenues

Copilot for Finance helps improve the strategies and processes to reduce financial risks associated with revenue streams. With AI monitoring and summarization, it can shift the focus from reporting to planning and forecasting, with less time spent closing books, and more for ad hoc analysis that can lead to better outcomes. Revenue forecasting and budgeting can be improved by more accurately spotting external macro-economy signals and using revenue variance analysis to spot revenue softness earlier and enable macro-analysis collaboration.

Learn more about Copilot for Finance

The future of public finance is here, and for many governments it’s powered by AI. Copilot for Finance offers a powerful new opportunity for finance teams to operate more successfully and efficiently than ever before. Learn more about how Microsoft is helping governments solve society’s biggest challenges and how we’re helping to drive financial accountability with public finance technology solutions.

• Copilot for Finance (preview) overview and documentation
• Sign up for Copilot for Finance preview

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¹ Future of Finance Trends, 2023.

² Microsoft Work Trend Index Special Report, 2023.

³ Internal Microsoft data.

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The answer is, of course, as unique as the organization. The myriad considerations of government priorities, regulations, legacy systems, and more all play into an administration’s approach to IT investment and AI innovation. There is no one-size-fits-all answer. However, through our work with Microsoft for Government, we see trends across tax administration for AI innovation, the value it is delivering for organizations, and the steps required for success.  

The compelling AI benefits for tax and revenue agencies 

At the core, the value of AI is all about simplifying the taxpayer experience while enhancing revenue collection. When taxpayers have an easier time filing and accurately paying their taxes, employees can work more productively, compliance can be assured more readily, and fraud can be detected more rapidly.  

The journey begins by identifying strategic objectives and then innovating solutions for specific challenges that translate into measurable outcomes. In our work with tax and revenue agencies, we see how AI and cloud technologies can improve experiences for both taxpayers and employees by helping to support the following outcomes: 

• Modernizing taxpayer services.
• Boosting tax employee productivity.
• Streamlining revenue collection processes.
• Accelerating error and fraud detection.
• Optimizing audit case management.

In helping every unique agency navigate the many options and issues involved in building a near-term as well as long-term AI strategy, we emphasize the importance of incorporating a set of key principles to help ensure trust in the tax ecosystem. Effective innovation must be implemented with a commitment to the following: accountability and transparency to manage public funds efficiently, ease of use for taxpayers to reduce friction and help ensure compliance, an outcomes-driven approach to measure impact of tax policies, and a 360-degree view of taxpayer data to support personalized and proactive services.  

Five areas of AI impact in tax administration 

Tax agencies worldwide are already realizing important benefits in the most essential aspects of their operations. Here is an overview of these focus areas, with specific outcomes for our customers.  

1. Modernizing taxpayer services  

Solutions built with modern cloud technology can help enhance trust with taxpayers by improving collection and reducing the cost of compliance. Advanced analytics give a 360-view of taxpayers to enhance experiences and make it easier to comply and pay taxes. 

An example of this is innovation by the Egypt Tax Authority, which contended with a longstanding shadow economy that was costing the country significant tax revenue. In response, they developed an e-invoicing and e-receipt solution built on Microsoft cloud services. The solution improved compliance by making the process easier for taxpayers, allowing them to choose the most appropriate channel for submitting receipts and invoices according to their current systems. The adoption of AI promises to further enhance these capabilities, supporting early-stage fraud detection and generating greater economic value. 

“The e-invoices have eliminated arbitrary estimations and reduced the tax examination to several hours, laying the foundations of an advanced tax system comparable to other countries.”

Mrs. Rasha Abdel Aal Radi, Head of the Egyptian Tax Authority

2. Boost employee productivity 

Cloud and AI technologies can empower tax agency employees to work and collaborate more efficiently and in a secure manner. Automating processes frees professionals to focus on tasks that are the most impactful for the agency and the taxpayer. Detailed insights, analytics, and reports can help break down data silos so teams can make more informed decisions. 

In Finland, the Finnish Tax Administration needed to ensure security in processing confidential data from 5.5 million citizens. Renowned for taking a digital approach to taxation that is widely popular with citizens, the agency turned to secure cloud-based solutions as they recognized the escalating threat of global cyberattacks. They started adopting Microsoft solutions in late 2018 and continue to benefit from ongoing AI enhancements to the Microsoft security stack.  

Beyond effectively helping to mitigate potential threats and identify false positives, the move also helps the administration’s security professionals work more efficiently and effectively.

“Until a few years ago, if we received an alert for a potentially nasty virus, it could take days before we could establish for sure if it was a false positive. Nowadays, [Microsoft solutions] make triage much faster, down to ten or fifteen minutes.”

Mikko Hakuli, Chief Security Information, Finnish Tax Administration

3. Streamline revenue collection processes 

AI streamlines the revenue collection process by automating the recording and reconciliation of tax data within the general ledger. Modern solutions provide agencies with real-time forecast data and AI-powered predictions for better services. This helps to ensure accurate and timely reporting, facilitating better financial management and forecasting. 

In England, the Somerset Council, a local government unitary authority, merged five distinct councils into one centralized financial system. By building upon their existing Microsoft platform, the council was able to streamline business planning, forecasting, funds disbursements, and financial reporting for all program areas. The implementation of automated workflows led to reduced errors in revenue collection and faster processing, which freed up employee time for more strategic activities.  

The council leadership is now exploring new possibilities around automation, analytics, and Microsoft Copilot as it expands ways to serve the greater community. 

4. Accelerate error and fraud detection and prevention 

Using machine learning and predictive analytics, AI identifies potential error or fraud cases by analyzing tax data and detecting patterns and anomalies in the economic activity of the taxpayer. This helps tax administrations proactively address error and fraud, which helps reduce revenue loss. 

The finance department in the state of Ceará, Brazil wanted to enhance tax compliance monitoring among retail vendors, so it implemented the new HMX Tax Intelligence System (TIS), which now processes more than 2.5 million transactions daily from more than 60,000 point-of-sale devices operated by 36,700 vendors. Using AI to analyze millions of digital sales receipts daily, the system identifies potential errors and tax avoidance and provides detailed explanations for compliance issues.  

“A big part of the power for TIS comes from its construction as a Microsoft Azure-native product. That provides the flexibility to scale up and down as needed, and TIS deploys in a hybrid, public-private cloud.” 

Michael Barnett, Executive Vice President for Cognitive Engineering

In one year, the solution delivered a 21% increase in new tax revenue from the previous year and an 84% improvement in audit efficiency. Additionally, the early warning capabilities of TIS can spot trends indicating fraud, and new noncompliance patterns are more easily detected with the new information 

5. Optimize tax and audit case management 

AI-powered case management systems can automate the flow of data in key workloads, which helps ensure accurate and comprehensive views of taxpayer economic activities and interactions. This enhances the efficiency of processes such as tax collection, audits, and appeals. 

In Costa Rica, the Inter-American Center of Tax Administrations (CIAT), which provides technical assistance to the tax administrations of its 42 member countries, wanted to improve the efficiency of data collection processes and curb fraud and revenue loss, so they enlisted Microsoft to develop a cloud-based solution. The result was the e-Invoicing Anomaly Detection Solution Accelerator, which effectively optimizes data collection, automates routine tasks, and uses machine learning to strategically allocate efforts where they are needed most. 

To cite just one benefit, the accelerator identified actionable insights based on detailed business analytics after detecting validation errors during the e-invoicing process.

“Getting these insights allows for faster and more confident decision-making and resource allocation.”

Mario Ramos, General Director of Taxation for Costa Rica

Read the ebook and learn more 

For more on how Microsoft is helping governments solve society’s biggest challenges, visit Microsoft for Government. Also, to learn how Microsoft is helping to drive financial accountability with public finance technology solutions, visit Microsoft for Public Finance and read the ebook.

The post Cloud and AI are shaping the future of tax administration in 5 essential ways appeared first on The Microsoft Cloud Blog.

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The new AI opportunities for public finance  

Public finance organizations are generally well positioned to take advantage of AI’s ability to redefine their services, operations, and impacts on government. Those who have adopted the Microsoft Cloud and Microsoft productivity applications are benefiting from the fact that, over the past decade, and especially the last 18 months, Microsoft has been integrating AI capabilities throughout our offerings.  

Copilots—AI-driven software assistants—are delivering immediate opportunities for ingenuity among ground-level and operational employees, as seen in Microsoft Copilot for Microsoft 365, the new Microsoft Copilot for Finance, and Microsoft Bing. For business and IT leaders, copilots across Microsoft Power Platform, Dynamics 365, Security, and GitHub make it simple to unlock powerful new capabilities with embedded, low-code features. And in cases where advanced solutions are called for, Microsoft Azure OpenAI Service enables the development of customized solutions such as virtual assistants, chatbots, automated systems, and intelligent applications.  

Thanks to the broad range of these capabilities, public finance agencies can move quickly to redefine their role and leverage new opportunities. To make this vision a reality, we focus on AI innovation with three specific objectives in mind.  

1. Simplify taxpayer experience and revenue collection 

One great opportunity with AI is to make it easier for people and businesses to pay the right amounts of taxes and fees, in ways that are embedded into their lives. AI powered solutions for taxation, customs, and license and permit processes can be simple and sensible while providing the security and compliance benefits of the cloud. AI helps with managing data and fostering faster ways of information sharing across agencies—a challenge that by one estimate costs European Union governments more than 50 billion euros a year.¹ 

In this regard, AI can help in many ways, including: 

• Modernizing taxpayer services—New engagement models can proactively build data intelligence to improve revenue collection, while reducing the cost of compliance, increasing agility, and improving productivity. Taxpayers can enjoy seamless experiences fostering a greater sense of trust in agencies. This proved to be the case with Estonia’s Information System Authority, which created an AI assistant that grants people with access to secure information about vital government services in a matter of seconds as opposed to days. 
• Boosting employee productivity—Employees tend to be more effective with tools that minimize drudgery and help them focus on delivering results and finding solutions. User-friendly, interoperable, and automated processes foster better productivity, and AI enables new ways to help employees find the right information at the right time. A key factor in realizing this potential is upskilling the workforce, which is why the Bank of Canada implemented an ongoing training initiative based on Microsoft Learn that provides individualized learning pathways with online on-demand and instructor-led content.  

2. Drive informed budgeting for economic development 

Trillions of dollars are distributed by governments around the world to households, businesses, local authorities, and others for stimulus, recovery, and resilience plans.² This puts an enormous responsibility on budget and treasury agencies, which have the complex task of allocating public resources in ways that measurably impact economic development. These agencies require innovative, secure tools that enable them to allocate the right support to the right beneficiary at the right time. Done well, these solutions also enhance collaboration between government and the private sector, which ultimately fosters financial inclusion. 

To meet these challenges, AI can help by: 

• Modernizing budget planning and execution—Employees in budgeting agencies often deal with legacy systems that are insufficient for accurate forecasting and planning. AI can help with new tools that improve these processes, as well as automate budget distribution, deliver reports, and improve forecast precision. Low-code, AI-enhanced tools can accelerate the creation of powerful solutions. In Japan, for example, the Ministry of Economy, Trade and Industry slashed development timeframes from one year to as little as one month by adopting Microsoft Power Platform.  
• Boosting employee productivity—Treasury agencies have significant management responsibilities, and high demands to operate with accountability and transparency. Cloud and AI can empower teams to better manage liquidity, optimize debt management, and manage reserves and investments, while also being efficient and secure. Productivity at the United Kingdom Department for Environment, Food, and Rural Affairs improved dramatically with a new cloud solution to provide a customer portal, streamline business processes, and add real-time reporting. By automating claim entry, they processed more than 40% of their annual 250,000 payments in the first three months.  

3. Mitigate fraud and corruption in public finance 

Fraud and corruption are major problems that incur trillions of dollars in losses worldwide every year.³ AI can help public finance agencies reverse the trend by helping to spot activities that may signal fraud, evasion, or abuse of public funds. To do this, agencies need solutions that give them fast, accurate, and comprehensive analytics, with a 360-degree view of taxpayer profiles to make informed decisions. 

Examples of how AI can help mitigate fraud and corruption include: 

• Improving compliance and protecting against fraud and corruption—Public finance agencies need solutions to combat illegal activities while also safeguarding taxpayers, employees, and all their data. AI enables solutions that analyze data from traditionally siloed, disconnected sources to detect anomalies and derive insights in previously impossible ways, while inherently protecting to ensure security and regulatory compliance. SymphonyAI, an enterprise software company that employs AI to solve financial crime, recently launched a copilot for investigators that automatically collects, collates, and summarizes financial and third-party information. Early experience shows that it can improve investigator productivity by more than 60%.  
• Enabling modern risk management—Risk is often inherent for public finance agencies, so teams need effective, modern approaches to risk management. These solutions should deliver monitoring and reporting across organizations and agencies, ensuring that everyone has complete, appropriate access to information. A good example is an Electronic Invoice Anomaly Detector built jointly by Microsoft and the Inter-American Center of Tax Administrations (CIAT), which strengthens electronic invoicing and reduces fraud and evasion for tax administrators in its member and associate member countries worldwide. 

The essential role of responsible AI 

The promise of AI would be impossible without trust. That is why Microsoft has long been a leader in ensuring the development of responsible AI, with principles designed to put people first. We believe AI exists to enhance human capabilities, not replace them, and we are committed to empowering responsible AI practices that benefit the world at large.  

The Microsoft Responsible AI Standard defines product development requirements for Microsoft technologies, guided by the principles of fairness, inclusivity, reliability and safety, transparency, privacy and security, and accountability. We believe this holistic approach can help public finance agencies deliver actionable results for their communities, with a minimum of risk and unintended consequences.  

Empowering public finance agencies with data and AI

It is an exciting time to be in public finance. Connected systems driven by data and AI set the stage for governments to unlock new possibilities such as tax compliance by design, intelligent connected trade windows, digital currency, outcomes-based budgeting, and cyber and financial crime detection and prevention convergence.

To learn more about how Microsoft is helping public finance agencies to reignite economies and improve accountability with AI, visit Microsoft for Public Finance.

¹ Politico, “Billions of euros lost to poor tax data, EU watchdog says,” Bjarke Smith-Meyer, January 2021.

² OECD, Global Outlook on Financing for Sustainable Development 2021, November 2020.

³ United Nations, “Global Cost of Corruption at Least 5 Per Cent of World Gross Domestic Product, Secretary-General Tells Security Council, Citing World Economic Forum Data,” September 2018.

The post 3 ways Microsoft AI capabilities are helping public finance agencies reignite economies appeared first on The Microsoft Cloud Blog.

1. Trade fragmentation. This trend, coupled with major technological disparities across markets, can affect global growth by reducing trade flows, creating silos and sectoral misallocations, and hindering the foreign diffusion of knowledge. The estimated cost of fragmentation could range from 1.2 to 12 percent of global GDP.²
2. Growing trade of services. The international exchange of ideas, expertise, and assistance—from architecture and law to logistics and telecommunications—account for half of all global exports and two-thirds of global GDP.³ Tracking these import and export transactions is challenging for customs agencies.  
3. Crime is moving online and growing in sophistication. Cyber-enabled financial crimes, such as business email compromise, executive fraud, e-commerce scams, and investment fraud, have escalated in nearly every region. Today’s ransomware attacks target ‘big game’ targets, including major corporations, governments, and critical infrastructure.  

These trends hinder progress and growth within customs and port authorities and addressing them requires immersive data management and cooperation. 

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The importance of immersive data management for customs and ports  

Immersive data management starts with a customs and port authority data hub. Data will drive the digital customs of the future, and a data hub provides real business insights and enables better decision-making. A data hub aggregates customs data into one place, applies AI and machine learning analytics, and visually displays the information to the right person, at the right time, in the right place, and on the right device. 

While the aggregated data provides one version of the truth, it also serves other purposes: 

• Provides insight into the tax compliance of a trade, linking all the associated documents so that 80 percent of trusted trade can be processed automatically. This enables customs officials to focus their efforts on the other 20 percent of ‘suspect’ trade.
• Provides insight into cross-border trading, combining the customs documents with other data points to enable officers to better target their intervention resources.
• Supports the optimization of portside cargo logistics. For example, it can enable an understanding of where unloading equipment is in relation to a ship docking, or uncover the most efficient way to get from the ship to market using trains, trucks, and other modes of transportation.
• Unlock insights into risk using advanced AI analytics to identify anomalous behavior, changes in trading trends, suspect activities, and more.
• Gives insight into the overall sustainability picture, from port and airport energy emissions through the entire supply chain.

The power of cloud technology, like that of the Microsoft Intelligent Data Platform, coupled with advanced AI analytics and human decision-making, can make this possible.  

Innovation unlocked by immersive data management 

2. Gaining real-time intelligence: Seamless operations require real-time intelligence on activities in and around the port. Deploying the Internet of Things (IoT) sensors across a port can provide unprecedented insight into real-time occurrences. Sensors can be deployed on cranes, vehicles, buildings, energy generators, containers, ships, tugs, people, and more.
3. Enabling remote operations: Creating a digital twin of a port can enable better understanding and management of operations remotely. With IoT sensors placed in different locations and on many pieces of equipment, port authorities can create a 3D map of the entire environment. These signals can be sent to enterprise resource planning (ERP) and customer relationship management (CRM) platforms via Remote Assist in Microsoft Dynamics 365 to remediate incidents or track resource allocation for remediation.
4. Promoting sustainable operations: IoT sensor data can also be combined with a customs warehouse building energy management system (BEMS). This provides invaluable insight into how the buildings are being used to identify opportunities for more sustainable processes. 
5. Increasing supply chain visibility and efficiency: The Microsoft Supply Chain Platform, with the Supply Chain Centerat its core, provides a “command center” experience for practitioners to harmonize data from across existing supply chain systems. Its data manager harmonizes and orchestrates data to provide visibility across the supply chain and drive action back into systems of execution.

Real-life examples of innovation in customs and ports  

Innovation—powered by immersive data management—connects people and technology in an integrated manner to enable intelligent port orchestration and deliver real business outcomes. Customs and port agencies are starting to leverage AI and machine learning technologies to transform their businesses, starting first with a focus on desired business outcomes:  

• European Maritime Safety Agency: With our partner, Codit, the European Maritime Safety Agency adopted an Azure-based Maritime Data Platform. This enables authorities to have insights into shipping patterns using geospatial imagery made available by Microsoft and Airbus. 
• Maersk: Maersk uses IoT devices on their containers—with Remote Container Management System on Azure—to track and monitor refrigerated shipping containers as they move across the globe. They leverage IoT data insights to optimize internal operations and create new projects.  
• Project SEEKER: Project SEEKER is a first-of-its-kind multispecies AI model developed using Azure machine learning services to combat smuggling and wildlife trafficking. It enables x-ray scanning that automatically detects illegally trafficked wildlife concealed within luggage and cargo. Wildlife trafficking often goes hand in hand with other organized crimes, including corruption and money laundering. 
• Ports of Jersey: The Ports of New Jersey benefit from multifaceted uses of The Bot Platform to connect and keep engaged a distributed workforce. 
• Microsoft Electronic Invoicing Anomaly Detector Accelerator (e-IAD): The e-IAD Accelerator is a practical example of how agencies can use Microsoft AI and machine learning at scale—within a tax and customs agency—using electronic invoicing data. Agencies can leverage insights to uncover patterns of anomalous activity that help improve revenue collection. The e-IAD Accelerator is the result of collaboration with the Inter-American Center of Tax Administrations and leaders from tax agencies around the world. 

Enabling digital customs of the future 

Customs is complex and adopting new technology can be daunting for many agencies. Microsoft can help agencies transform operations with a focus on business outcomes. Now is the time for customs organizations to adopt an intelligent data platform, embrace AI and machine learning, IoT, and explore other modern technology like virtual and mixed reality, blockchain, drones, and more.

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To learn more about how Microsoft supports customs and port authorities innovate their operations, read our whitepaper, Digital Customs of the Future. 

Digital Customs of the Future

Supporting customs and port authorities to innovate their operations.

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¹ UNCTAD, Global Trade Upgrade (March 2023).

² International Chamber of Commerce, ICC 2023 Trade Report: A fragmenting world, April 6, 2023.

³ World Economic Forum, These 3 charts show how international trade works—and the current state it’s in, October 4, 2021.

The post Delivering innovation in customs and port operations with Microsoft for Public Finance appeared first on The Microsoft Cloud Blog.

Society demands more from government today than ever before. Gone are the days where government budgets could be set without transparently connecting taxpayer money directly to tangible outcomes. Today, traditional “analog” government structures that permit departments and services to operate in silos are understandably challenged by citizens, agency employees, and businesses alike.

So how can budget and treasury agencies meet these desired outcomes, enable real-time public services, and provide measurable social and economic outcomes? With innovative technology that enables outcomes-based budgeting, leading to more accountability and increased cross-agency effectiveness.

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Outcomes-based budgeting allows agencies to track progress to jurisdictional outcomes that would have been near impossible in the past. It also empowers agency employees with innovative and secure tools that cater to desired government investments and fosters financial inclusion.

In figure 1 below, each box represents one of the outcomes agencies strive to achieve. The colors reflect the type of technology required to provide the financial foresight to measure these outcomes. For example, agencies are looking to improve the skills of the workforce to get better jobs in the future. To deliver on and measure this outcome, they need technology to improve collaboration and knowledge sharing, like Microsoft 365 and Microsoft Viva Learning. Similarly, to deliver on the business outcome of making trade easier both in-country and abroad, agencies need technology for both digital payments management, Microsoft Azure, and collaboration and knowledge sharing, like Microsoft 365. 

This vision of outcomes-based budgeting and financial foresight hinges on three pillars of transformation for budget and treasury agencies:

1. Become predictive, connected and agile: An expanded impact through strategic foresight capabilities that allows treasury departments to cope with increasing volatility of interconnected global socioeconomic ecosystems and influence broader policy.
2. Be a trusted and transparent government advisor: Shift in focus to proactively build trust and transparency and to empower near-real time policy advising.
3. Foster financial inclusion, innovation, and resilience: Enable an evolving landscape of financial innovations to facilitate financial inclusion and resilience for agencies and countries as a whole.

To facilitate such transformation, budget and treasury agencies need to consider four main technology areas:

1. Modern budget planning: Enhanced budget forecasting capabilities and process automation that’s agile, real-time, and intelligent to enable immediate and actionable budgetary execution, reporting, and compliance management.
2. Accountable treasury management: Highly transparent, nimble, and intelligent management systems that automatically manage the liquidity of national assets, debts, reserves, and investments.
3. Targeted grants management: Streamlined grants programs that are aligned to national investment objectives, with shorter and more transparent approval procedures to facilitate the efficient disbursement of grant cases. In addition, the ability to generate reports on the impact of disbursements to national objectives such as gross domestic product (GDP) growth and jobs creation, for instance.
4. Sustainable public procurement: Compliant and highly transparent digital procurement platforms that can easily allow automated IT or financial audits to occur at any point in time. Furthermore, the agility to integrate new policies and regulations into the procurement process that’s aligned with national agendas, such as environmental, social, and corporate governance (ESG) goals or the various trade agreements.

City of Columbus elevates budget planning and streamlines budgeting processes

The City of Columbus is a prime example of a government budget and treasury agency who harnessed the power of technology to streamline processes, empower employees, and embrace the above tenants of outcome-based budgeting. As the capital of Ohio and the 14 largest city in the United States, the city strives to meet the challenges of their modern, growing city, including for government budgeting and accounting. For a city, the level of scrutiny on every dollar collected and every dollar spent is high. They understood that, as mentioned above, financial planning, budgeting, and accounting need to be fully transparent and traceable.

They partnered with Microsoft to adopt a solution based on Dynamics 365 Finance, and using elements of Dynamics 365 Supply Chain Management, commerce applications and Microsoft Power Platform. Currently, the city maintains over 150 budget plans and 9,000 forecast positions, and more than 3,500 grants and capital projects. Many of these processes use workflows with multiple levels of approval, adding to the complexity.

With Microsoft Dynamics 365, the city can easily and flexibly maintain, manage, and adjust those process flows as their needs change. In a short amount of time, the City of Columbus has been able to recognize some of the expected results with Dynamics 365, including a reduction of more than 10 percent in budget planning effort and increased productivity for remote employees.

• Less effort for better budget planning: With Dynamics 365 the city has enhanced the budgeting process for around 60 users engaged in budget planning. The intuitive, easy-to-use interface looks and feels like Microsoft Excel, and has allowed users to reduce time and effort spent on budget modeling and maintenance. With up-to-date budget information, a set of Microsoft Power BI reports with views of budget data are used to review and validate budgets as the team moves through the budget cycle.
• Increased productivity for remote employees: Employees can access the system from anywhere, without VPN, increasing productivity and strengthening disaster recovery. These capabilities were tried and tested during COVID-19, as lockdowns took hold and city employees were forced to work from home. The ability to access and interact with systems just like they do at the office helped the city remain productive and continue to service the needs of Columbus residents. 

Utilizing technology to build long-term financial resilience

As treasuries face new challenges and their priorities shift towards tackling current and future crises, the government has a unique opportunity to demonstrate how they leverage new technologies to build long-term financial resilience and inclusion, empower employees, and enable sustainability. This requires efficient internal processes that can be automated easily to free time and effort for other priorities, like inclusion and sustainability. Microsoft solutions like Dynamics 365 Finance and Microsoft Power Platform can be leveraged to achieve operational excellence and provide low-code tools for automation. We partner with organizations worldwide to utilize the insights of these learnings and harness the power of data-driven services and cooperation to build a better future for everyone.

To learn more about how the City of Columbus harnessed technology to transform finance processes and how Microsoft can help empower treasury agencies to drive outcome-based budgeting, visit Microsoft in Public Finance.

The post Discover how Microsoft can help treasury agencies drive outcome-based budgeting appeared first on The Microsoft Cloud Blog.

While there are promising results, AI needs to further evolve and mature to drive increased impact. Democratizing access to AI, training more experts in data science and data engineering, and deploying more agile development life cycles are all key for that evolution and progress.

Tax administrations have traditionally used risk-based models applied in batch at the end of the fiscal year to look for discrepancies. AI and machine learning present an exciting opportunity to move to near-real-time detection and reporting of discrepancies on tax data to the government. We invite you to read Microsoft Fraud Protection Capabilities to see how Adaptive AI continuously learns to protect you against payment fraud, bots, account takeover, and returns and discounts fraud. This article introduces account protection and how AI addresses common challenges such as fake accounts, fraudulent account access, and user account abuse.

Changing payment methods

Billing and payment methods are changing the rules in the public finance industry. Billentis¹, forecasted that the global market for electronic invoicing is expected to be 550 billion invoices annually and will quadruple in size by 2035. Governments worldwide are pushing e-Invoicing as a mechanism to perform fiscal reporting, with better collection of value-added taxes (VAT) being one of the key drivers.

Existing risk-management and business rule-matching techniques used by tax agencies to run background checks, qualify, and detect fraud and other such tasks can be enhanced by using AI/ML to:

• respond proactively and rapidly to a detected event with near-real-time data.
• integrate more sources of data and share data across the tax ecosystem
• better understand taxpayer reporting and compliance behavior.
• improve the quality of data.
• drive more proactive digital audits and less reactive audits.

How a tax agency can improve its effectiveness in the detection and prevention of fraud

We consider four dimensions to build an organizational capability: people, process, technology, and data.

People—culture and digital skills

Building AI/ML and data science capabilities involve developing qualified human talent with appropriate skills and introduce new ways of getting things done. A culture of innovation and digital skills are fundamental for this change. You can read about what Microsoft offers in digital skills-building in this article: “Microsoft launches initiative to help 25 million people worldwide acquire the digital skills needed in a COVID-19 economy.”

Subject matter experts in the business are key to leveraging the institutional knowledge related to risk management, tax auditing, and tax intelligence. They play a crucial role in the exploratory phases and even more so in interpreting and validating results produced by AI/ML. Business subject matter experts are the ones who finally validate and qualify an AI/ML result as fraud—or not.

Process

For fraud detection and prevention, the process for interpreting results is critical. Once diagnosed, identified anomalies, abnormal behaviors, or potential fraudulent taxable transactions need confirmation through automated techniques with a ‘human in the loop’ validation procedure. Human intervention allows the tax authorities to leverage the organizational knowledge from their in-house subject matter experts and make appropriate interpretations surfaced by the models.

Further, adopting low-code application development and process automation can help generate actionable data insights, connect to auditing systems, and automate alerts and notifications. The benefits extend to the productivity of the human talent that participates in the fraud detection process. Here is an inspirational success story of how a “Progressive retailer resolves challenges with low-code automation and AI solutions.”

Technology

An effective practice to detect and prevent fraud demands the use of multiple analytics and machine learning techniques. These include text clustering, entity resolution, risk scoring, network analysis, and others. They are selectively used to do taxpayer profiling and segmentation, risk scoring of tax operations, analysis of the supply chain, and identification of abnormal transactions among many others.
Security and privacy are genuine concerns for government agencies when storing data in the public cloud. The evolution of confidential computing and other technologies are enabling strong isolation of sensitive data while at rest and during processing in the cloud.

Investing in agile development practices such as , MLOps, and DataOps are essential for the efficient deployment, testing, calibration, and operationalization of machine learning algorithms. This is foundational for introducing effective fraud detection on tax agency data. You can read the “GigaOm-Delivering on the Vision of MLOps” report to familiarize yourself with the MLOps practice.

As tax agencies collect more types and larger amounts of data such as e-Invoicing, capabilities in the hyper-scale cloud provide a backbone to deal with the volume, variety, and velocity of such data. Big data solutions in the cloud provide the flexibility, performance, and efficiency required to do near-real-time data processing.

The following figure illustrates the challenge of increasing volumes of data when e-Invoicing is introduced.

Data

And finally, the importance of good data that is critical to achieving the best results. That said, developing good-quality data is not simple. However, the introduction of near-real-time analytics helps detect quality gaps and introduce preventive practices, such as alerting the taxpayer for inconsistencies. Conventional analytics processes run after the fact, months or maybe even years later, limiting the opportunity to fully exploit data for its potential. That is why near-real-time analytics is highly valuable for Tax Agencies.

A major opportunity is the ability to drive value from data as fast as possible. Near-real time analytics should be part of the AI agenda. According to the Organisation for Economic Co-operation and Development (OECD): ‘The advent of a digital age in government has created new opportunities for assessing risks of fraud and corruption in infrastructure.’ ²

AI maturity

As we mentioned at the beginning of this article, the adoption of AI and machine learning is a journey, moving through multiple levels of maturity. As you can see in the figure below, Microsoft has identified four maturity levels for tax administrators to adopt AI and ML.

A comprehensive AI platform is a key component for fraud detection and fraud prevention in the tax administration.

Summary

Speedy responses are critical for detecting and preventing fraud. Newer and fast emerging tax-evasion schemes introduce higher levels of sophistication and complexity that departments need to address constantly. The digitalization of taxable transactions has become a reality. All this presents a very real opportunity for tax administrators to increase the use of artificial intelligence to use data proactively and at near-real-time to fight against fraud.

A comprehensive approach for enhancing AI, acquiring human talent, creating AI processes, implementing an AI platform, and improving the use of tax data, is therefore fundamental.

We invite you to read more about the Microsoft Fraud Protection capabilities to see Adaptive AI that continuously learns to protect you against payment fraud, bots, account takeovers, and returns and discounts fraud. This provides a good source of inspiration to introduce fraud prevention and protection in Tax .

To learn more about Microsoft’s global view in Government, visit our web page

¹ Bellentis, The e-invoicing journey 2019-2025, Fourth Edition, September 2019

² Analytics for Integrity: Data driven Approaches for Enhancing Corruption and Fraud Risk Assessments, OECD 2019.

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