Criteria for Assessing the Effectiveness of Digital Tax Administration

Digital technologies are rapidly entering all public administration areas, transforming how information is collected and processed, allowing faster and more effective decisions. Digitalization of tax administration is not only about technical aspects but also about the managerial and strategic dimensions of the effectiveness of digital technologies. This research employs a multi-criteria decision-making (MCDA) model alongside key performance indicators (KPIs) to evaluate the effectiveness of digital tax administration systems. The study aims to analyze digitalization's effects on tax administration, explore technological integrations' fiscal and administrative ramifications, and develop a methodological framework informed by international experiences. The study's theoretical background reviews previous research and the practices of leading nations (including OECD countries, Estonia, Russia, Turkey, and Mexico). The research methodology employs a mixed-methods approach, utilizing quantitative and qualitative data. Statistical metrics were gathered to compare conditions pre- and post-digitalization. The author conducted surveys with taxpayers and tax authorities and expert interviews to evaluate the system's institutional aspects. The collected data was analyzed using SPSS, NVivo, and Excel, incorporating thematic analysis, trend analysis, and correlation methods. This study organized the evaluation criteria into three categories: a) Economic Criteria: Reduction of operational costs, increase in revenues, narrowing of the tax gap, and return on investment (ROI); b) Administrative Criteria: Flexibility in decision-making, extensive audit capabilities, transparency, and accountability; c) Technological Criteria: System stability, level of automation, data security, and user interactivity. The outcomes, weighted according to these criteria, were aggregated using the MCDA model to derive the overall efficiency index. Findings indicate that introducing digital systems results in a 20–25% reduction in administrative costs enhances audit resources' effectiveness, and leads to a consistent rise in tax revenues. Concurrently, taxpayer satisfaction levels and the rate of voluntary compliance have improved. Azerbaijan's learned experience in improving tax administration through digital technologies can be a model for other countries in the region. Technological elements such as e-invoices, e-cash registers, API integrations, personal accounts, and ASAN signatures have established a framework for centralizing data within the tax system and automating decision-making processes. In Azerbaijan, the tax gap has decreased from 20% to 11.5%, with 95% of declarations being filed electronically. As a result, Azerbaijan achieved an efficiency index of 87.95 points. The study provides recommendations for digitalizing tax administration, focusing on efficiency criteria. After all, digital tax administration is not just technology but also a tool for good governance, open policies and better public control. If properly implemented, these systems increase tax collection and citizens' trust in the state.