Artificial intelligence poses challenges to global tax systems

The rise of artificial intelligence and autonomous agents is creating significant challenges for global tax frameworks. As AI increases productivity while potentially reducing the reliance on human labor, traditional tax bases—which rely heavily on income and payroll taxes from human workers—may face erosion.

In India, legal experts are examining the attribution gap in tax law, noting that current statutes do not recognize AI agents as “persons.” This creates complexity in determining who is responsible for taxes on income, goods and services, and virtual digital assets generated by autonomous systems. Proposed solutions include implementing operator-attribution rules and clarifying supplier identification under GST to maintain a human-centered tax framework while addressing the economic functions of AI.