Value-added tax fraud detection with scalable anomaly detection techniques

A Decision Support System for Corporate Tax Arrears Prediction

This paper proposes a decision support system to predict corporate tax arrears by using tax arrears in the preceding 12 months. Despite the economic importance of ensuring tax compliance, studies on predicting corporate tax arrears have so far been scarce and with modest accuracies. Four machine learning methods (decision tree, random forest, k-nearest neighbors and multilayer perceptron) were used for building models with monthly tax arrears and different variables constructed from them. Data consisted of tax arrears of all Estonian SMEs from 2011 to 2018, totaling over two million firm-month observations. The best performing decision support system, yielding 95.3% accuracy, was a hybrid based on the random forest method for observations with previous tax arrears in at least two months and a logical rule for the rest of the observations.

Investigation of Combining Logitboost(M5P) under Active Learning Classification Tasks

Active learning is the category of partially supervised algorithms that is differentiated by its strategy to combine both the predictive ability of a base learner and the human knowledge so as to exploit adequately the existence of unlabeled data. Its ambition is to compose powerful learning algorithms which otherwise would be based only on insufficient labelled samples. Since the latter kind of information could raise important monetization costs and time obstacles, the human contribution should be seriously restricted compared with the former. For this reason, we investigate the use of the Logitboost wrapper classifier, a popular variant of ensemble algorithms which adopts the technique of boosting along with a regression base learner based on Model trees into 3 different active learning query strategies. We study its efficiency against 10 separate learners under a well-described active learning framework over 91 datasets which have been split to binary and multi-class problems. We also included one typical Logitboost variant with a separate internal regressor for discriminating the benefits of adopting a more accurate regression tree than one-node trees, while we examined the efficacy of one hyperparameter of the proposed algorithm. Since the application of the boosting technique may provide overall less biased predictions, we assume that the proposed algorithm, named as Logitboost(M5P), could provide both accurate and robust decisions under active learning scenarios that would be beneficial on real-life weakly supervised classification tasks. Its smoother weighting stage over the misclassified cases during training as well as the accurate behavior of M5P are the main factors that lead towards this performance. Proper statistical comparisons over the metric of classification accuracy verify our assumptions, while adoption of M5P instead of weak decision trees was proven to be more competitive for the majority of the examined problems. We present our results through appropriate summarization approaches and explanatory visualizations, commenting our results per case.