Tax Administrations (TAs) have processes in place to ensure that the person they are dealing with is, in fact, the taxpayer or their authorized representative. They seek to prevent illegal attempts to obtain information and thus guarantee the protection of taxpayers’ rights.

Whether from legal obligation or as a matter of good business practices, they devote considerable effort to ensuring the security of taxpayer information.

These approaches have in many cases been extended to multifactor authentications and use unique biometric information of the taxpayer, as well as modern technology, such as artificial intelligence.

Below we discuss some of the identity authentication methods and country examples as it emerges from the recent report Tax Administration 2025: Comparative Information on OECD and other Advanced and Emerging Economies.[1]

1. Methods of identity authentication.

All TAs use some kind of authentication method to verify the digital identity. The type of verification method varies.

According to Tax Administration 2025, 77% of TAs use password-based authentication, followed by multi-factor authentication, the mobile application, and the identity document.

Some TAs also reported using facial recognition or fingerprint recognition to authenticate a taxpayer’s digital identity.

Two-thirds of these reported that the use of different authentication methods is based on the level of security required for certain types of interactions.

2. Identity management cases.

In Austria, the Ministry of Finance has increased the use of digital solutions to make access to its online portal (FinanzOnline) more secure and efficient.

A key milestone was the introduction of regular video appointments, an alternative to face-to-face visits.

Customers and employees can attend these meetings from anywhere, identifying themselves through ID Austria.

Based on these experiences, the Video-Ident procedure was developed to serve taxpayers who cannot use ID Austria or other identification methods compatible with the European Union.

The identity verification is conducted by video and is supported by an external database for the verification of international identity documents.

The standardized process is conducted by trained staff, with appointments available in both German and English.

Secure authentication ensures that sensitive queries are processed efficiently, prioritizing data protection and ease of use.

In particular, in the field of telephone authentication, this allows, for the first time, the secure and fluid handling of confidential information.

In Canada, a Digital Identity Verification (DIV) service from the Canada Revenue Agency (CRA) is applied, which leverages AI to validate users’ identities online, providing a simple method for obtaining complete and instant access to the CRA’s online services.

Since its launch, 60% of users have chosen to use DIV instead of the traditional mail option.

This change has reduced the workload in call centers, decreased the paper mail that can be expensive and reduced processing times, allowing staff to focus on other more complex tasks.

Japan has introduced digital certificates for smartphones to make it easier for taxpayers to verify their identity online. This eliminates the need to use a physical card to file the income tax return online.

Online tax filing using physical cards in Japan accounted for around 70% of all online tax returns filed from home in 2023.

“Digital certificates for smartphones” is a service that allows taxpayers to certify their identity using their smartphones, installing digital certificates with an equivalent personal identification function.

This simplifies the verification process and increases convenience for taxpayers, reducing the burden when filing the income tax return.

The Tax Administration in the Netherlands (NTA) is exploring the use of digital identity and wallets, in line with the Tax Administration vision 3.0.

The objective is to collaborate with stakeholders to improve the smoothness and reliability of business transactions.

An example of its effectiveness is electronic invoicing (e-invoicing), which faces challenges such as the diversity of protocols and the variation of identifiers, as well as the dependence on intermediaries.

The initial experiments used the European Blockchain Services Infrastructure Trust Registry to issue verifiable credentials and demonstrate interoperability between organizational wallets.

In addition, a pilot project showed the interaction between personal and organizational wallets, and the use of the VAT tax identification number to verify the existence of online stores.

Currently, the NTA is developing a decentralized address book for verified metadata and selective disclosure mechanisms for electronic invoices.

Future developments include the integration of organizational wallets with accounting software and enterprise resource planning systems for the electronic verification of invoices.

In United Kingdom, to improve the performance of the Tax Agency (HMRC) and the overall customer experience, UK ministers committed to introducing a new requirement for income tax return agents to register with HMRC if they process refunds.

This was part of wider work to explore options to improve the regulatory framework for tax advice and services.

Previously, tax refund agents who specialized in submitting income tax refund applications on behalf of their clients used paper forms and did not need to register with HMRC.

This was in contrast to other agents using HMRC’s digital services.

This limited HMRC’s ability to proactively check whether the agent was registered for anti-money laundering supervision and whether they met HMRC’s standard for agents before processing their applications.

Introduced in February 2024, HMRC now has the ability to link paper tax relief application forms to digital registration processes, reinforcing HMRC’s commitment to ensuring that no unregistered refund agent actively submits applications without the taxpayer’s consent.

These changes seek to reduce the associated customer complaints annually (2024-2025) by 40%, with the goal of issuing refunds to the correct person by 99.98% by September 2024.

The progress resulted in HMRC forcing agents to use their Agent Services Account registration process for all income tax related work, to ensure they can track who an agent is and that they meet the appropriate standards.

3. CONCLUDING REMARKS

As we see, the importance of identifying taxpayers is a vital process in the TAs.

The challenges are many, especially because personal information can be misused to impersonate taxpayers and commit fraud.

The rise of generative artificial intelligence with image and audio generators will further complicate this situation.

In conclusion, we believe that it is vital that TAs devote considerable effort to the correct identification of taxpayers and thus avoid frauds such as identity theft and information leakage, among others.

What do you think?

[1]OECD (2025), Tax administration 2025: comparative information on the OECD and other advanced and emerging economies, OECD publications, Paris, https://doi.org/10.1787/cc015ce8-en .

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