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Tax and Technology

The inexorable march of technological advancements and rapid evolutions in business models across entire industries, both in the digital and the “digitized” economy, are challenging the traditional norms of international taxation as never before. Blockchain Technology, Fintech, Cloud Computing, Artificial Intelligence, Robotics, the Internet of Things, and Industry 4.0, among others, are disrupting traditional modes of operations, processes and global value chains, and pushing the existing boundaries of taxation. Yet at the same time, these technologies open up opportunities to transform the way that tax administrators operate and interact with tax-payers. This project brings together all of the major stakeholders to build a shared awareness of tax technology capabilities to meet some of the information reporting requirements.

Blockchain: A Tool for Tax Administration

Blockchain is a potentially transformational technology that could have as much impact as the arrival of the Internet in the 1990s. The ability to create a transparent and immutable record of transactions between parties that may not fully trust one another has obvious application for finance and financial regulation. Add to that the ability to automate transactions them-selves through ‘smart contracts’ and you have a recipe for slashing transactional costs and reducing the need for traditional intermediaries.

In March 2017, WU GTPC took an important first step in a pioneering initiative of bringing together tax officials with industry experts, IT solutions developers, representatives of the business and academic community in order to engage the tax policy makers and administrators in a discussion at a time when technology itself is at its developing stage. The following areas for the application of Blockchain, Robotics and AI were identified as particularly promising: payroll and VAT, customs, transfer pricing, and property taxes, which could all yield benefits from increased transparency and compliance and/or reduction of transaction costs through smart contracts.

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