The Role of Financial Digitalization in Enhancing Tax Collection in Brazil (2013–2023)

Abstract

In recent decades, financial digitalization has played a pivotal role in enhancing tax revenues and creating an investment-friendly environment by simplifying tax procedures. It has also contributed to strengthening citizen value, reducing the size of the informal economy, and curbing tax evasion, owing to the effective digital solutions it provides. These, in turn, have improved the efficiency of tax administrations. Financial digitalization has directly contributed to enhancing several tax indicators, such as increasing tax revenues, reducing cases of tax evasion and fraud, facilitating tax procedures, and achieving fiscal sustainability. Indirectly, it has supported development by creating a favorable investment climate, thereby making financial digitalization an indispensable pillar in modern development policies.

Within this context, the study aims to analyze the role of financial digitalization in enhancing tax revenues by examining the experience of Brazil as a pioneering country in this field, given the qualitative achievements it has accomplished in developing its tax system. The study rests on the hypothesis that financial digitalization constitutes a decisive factor in broadening the tax base, simplifying procedures, reducing both time and financial costs, and limiting opportunities for tax evasion.

The study concluded that, despite the challenges that Brazil still faces in this field, the country has been able, through its digital transformation strategies, to achieve tangible increases in tax revenues and to enhance the efficiency of collection in a manner consistent with the study’s hypothesis.