Revenue’s freshly released Annual Report 2025 is carefully worded when it comes to its use of AI, but the direction of travel is obvious, at least in my opinion.
Revenue says that it doesn’t use AI to make tax assessments or decisions. Instead, it says AI is being used in a “prudent manner” to support operational goals, including:
- screening and flagging issues across tax cases
- automating internal processes
- document summarisation
- idea generation
- internal code development in sandboxed environments
That sounds very administrative and focused on driving internal efficiencies, but my understanding is that it points to something more significant. AI is already becoming embedded in revenue’s REAP ecosystem (Risk Evaluation and Profiling).
Revenue actually avoids explicitly saying this. The key sentence in the report is not the assurance that “AI does not make decisions”. The key sentence, in my opinion, is
“screening and flagging issues across individual tax cases”.
That is effectively the engine room of modern tax compliance now. In practice, this means AI is increasingly influencing:
- risk profiling
- audit selection
- anomaly detection
- case prioritisation
- behavioural analysis
- compliance monitoring
Human case workers may still make the final determinations, but AI is increasingly determining which taxpayers and transactions attract scrutiny in the first place. That distinction matters.
We are increasingly seeing this reflected in practice through more focused VAT interventions, PAYE reviews, bookkeeping queries and requests for reconciled supporting records. Businesses with weak bookkeeping, inconsistent reporting or unreconciled balances are becoming more exposed in an increasingly data-led compliance environment.
Revenue’s REAP system already operates on extensive real time and cross referenced data streams, including payroll reporting, VAT filings, customs data, third party returns, sector benchmarking and historical compliance patterns. AI materially strengthens Revenue’s ability to interrogate these datasets at scale, particularly as data sharing between agencies and digital platforms continues to expand.
How Revenue Builds a Broader Picture of Taxpayer Activity
Revenue increasingly operates within a broader connected data ecosystem that extends beyond the information disclosed in a taxpayer’s own self assessed return.
The recent carers’ allowance controversy demonstrated how data flows between government bodies can fundamentally alter Revenue’s visibility over taxpayer information. Data-sharing arrangements with the Department of Social Protection allow cross checking of welfare claims and employment income. It works both ways.
Through PAYE modernisation, Revenue already receives real-time payroll data directly from employers. VAT modernisation is on it’s way.
Financial institutions report account information under the Common Reporting Standard (CRS)
Social Media Influencers continue to be a focus area for Revenue. Digital platforms such as Airbnb, Etsy, Vinted and other online marketplaces now report seller activity under DAC7, and payment providers are also subject to EU transaction reporting obligations.
The direction of travel is clear. Revenue’s compliance capability increasingly relies on combining multiple third party and cross agency datasets to build a far more comprehensive picture of taxpayer activity than could ever be derived from tax filings alone.
Revenue is now increasingly using AI to assist, has the ability to interrogate very large volumes of data from multiple sources, allowing it to identify inconsistencies and undeclared activity far beyond what could be detected through traditional manual review of tax filings alone.
Revenue’s Focus on Cybersecurity Also Reveals Active AI Deployment
As Revenue becomes increasingly data driven and AI enabled, cybersecurity becomes mission critical.
The accompanying cybersecurity feature on page 85 reinforces this.
Another important aspect of page 84 is Revenue’s repeated emphasis on secure deployment and controlled environments. The report references sandboxed large language models, isolated environments, staff AI training and the safe and effective use of AI tools. Revenue appears keen to reassure taxpayers that human oversight remains in place, governance controls exist and sensitive taxpayer data is protected.
But importantly, the report confirms that Revenue has already built sandbox environments to test and deploy AI tools in controlled settings. For me, this reveals that Revenue is actively investing in AI development, and are already using sandboxed environments as controlled learning spaces to refine its systems, build internal expertise, train and develop operational AI capability.
Revenue is no longer theorising about AI, they’re developing and testing it.
This is no longer theory, it’s in black and white in their own annual report. .
Final Observation
The most important takeaway is not whether AI technically “makes decisions”.
It is that Revenue is steadily building an AI assisted compliance environment where:
- data anomalies are flagged automatically
- behavioural risks are profiled continuously
- interventions are increasingly intelligence led
- audit selection becomes more targeted and predictive
- Data is received from multiple sources.
- AI opens the ability analyse huge volumes of data.
That is a major evolution in Irish tax administration, and businesses should prepare accordingly.
What can Businesses be doing Now
The focus now has to be on maintaining strong books and reconciliations, accurate ongoing reporting and proactive tax advisory support. As Revenue’s AI capability and access to cross-agency and third-party data continues to expand, businesses need to ensure that financial records, payroll reporting, VAT filings and tax positions are consistent, supportable and fully reconciled.
At our local Xeinadin office, we are increasingly supporting businesses with internal VAT and PAYE audits, bookkeeping reviews, management accounts and ongoing reporting processes to help ensure records remain accurate, reconciled and Revenue ready in an increasingly intelligence led compliance environment.
The businesses best prepared for Revenue’s evolving compliance environment are those with accurate books, strong reconciliations and proactive advisory support already in place.
If you would like to review your bookkeeping, reporting processes or tax compliance, don’t hesitate to get in touch.
Lisa Lokasto 
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