One of the core features of blockchain is a single version of truth. This is an important attribute in taxation in particular.
Given inherent features of distributed ledger technology, a complete audit trail is maintained and depending on the permissions, a tax authority will be able to verify transactions and ascertain tax liabilities from there.
Real time tracking of goods and services will also be able to determine tax liabilities of users. For example, to determine the origin of goods will help determine what import tax tariffs need to be paid or whether VAT/GST should apply to a particular good.
A component that is important for this process is smart contracts. The taxation system at present relies heavily on honest reporting and accurate information.
With blockchain, there is the possibility of shifting this to an automated and accurate system that has a single version of truth. Any fraudulent activity would be easier to detect.