Algorithmic Governance and Tax Audits: Can AI Decide Your Tax Future?

How should artificial intelligence be regulated when used for tax audits? What rights do taxpayers have in the face of automated decisions? How transparent is the Mexican tax authority (SAT) when using algorithms? These are just some of the questions explored in the new report published by Leal Benavides y Cía.: "Algorithmic Governance: The Use of AI in Tax Audits", authored by Dr. Gustavo Leal Cueva.

AI and Tax Oversight: An Irreversible but Fair Change?

Tax digitalization is no longer a future trend—it's already here. For years, tax administrations around the world have used algorithms and predictive models to automate audits, detect evasion patterns, and classify tax risks. The United States, for example, has employed explainable and auditable AI systems for over two decades. But in Mexico, the scenario is different: opacity prevails, there is no public information about the models being used, and taxpayers are left at a disadvantage when facing an automated audit process they cannot fully understand or challenge.

Mexico in the International Mirror

The report offers a detailed comparison with countries like the United Kingdom, Chile, Canada, and Brazil, highlighting how other tax systems have integrated transparency, institutional oversight, and public participation into their digital tax enforcement strategies. In contrast, the SAT still operates under a “black box” logic: closed models, no explainability, and no clear functional attribution.

Which Rights Are at Stake?

If unregulated, artificial intelligence can threaten fundamental rights such as:

• The right to be informed

• The right to be heard before a resolution

• The right to understand the rationale behind an audit

• The right to self-correct without facing automatic sanctions

The report proposes specific reforms to the Federal Law on Taxpayers' Rights to ensure these principles remain compatible with an era of automated decision-making. It also analyzes the European Artificial Intelligence Act, offering a valuable benchmark for building rights-based regulatory frameworks.

An Urgent Call for Transparency

Beyond analyzing Mexico’s tax system, the report puts forth a clear thesis: modernizing tax oversight must not come at the expense of legality, equity, or democratic control. Technology should not become a new face of opacity.

If you’re a taxpayer, tax advisor, accountant, public official, legal expert, technologist, or simply interested in the public impact of AI, this report is a must-read.

Download the full report for free here (only in Spanish): Algorithmic Governance: Use of AI in Tax Auditing