An ongoing challenge for tax functions is accessing the full spectrum of information from across their business that could be relevant to tax. Blockchain based income tax now have the ability to collect and collate enormous amounts of data but the tax function is rarely involved in that process. As a result, tax functions can be consulted too late on issues and decisions that have tax implications.
Blockchain suits transactions and could be applied to transactional taxes, such as VAT, withholding tax, stamp duties and insurance premium taxes. The technology could also help with transfer pricing. For example, could it codify the judgments made when establishing how profits are attributed to different parts of a business? It was agreed there was nothing to stop this being done from a technology perspective. Blockchain has emerged at a time when many blockchain based income tax the tax world are thinking about whether the current tax system — which was designed for the days when physical goods were traded, bought and sold — is still fit for purpose in the modern, digital era.
The rise of the sharing economy, digital business and new blockchain based income tax models have caused many people to think again about the tax system. Does it still make sense for tax authorities to collect tax as they always have done in the past?
In a transaction-based world should the tax system adapt to follow suit? But where is value created, and how should it be taxed? Blockchain makes fraud and errors far easier to detect because the system provides clear and transparent information about transactions and items in the network.
Blockchain could also help to drive behavioural change because of the risks and consequences of non-compliance. In these ways, it is likely blockchain could help reduce the tax gap to some extent. John Stevani and Paul Smith give their opinion in this blog. Kevin Nicholson Head of Tax Tel: Laetitia Lynn Head of tax communication strategy Tel: But what could it do for the world of tax?
Fraud is less likely and easier to spot Real-time information: Data and transparency An ongoing challenge for blockchain based income tax functions is accessing the full spectrum of information from across their business that could be relevant to tax. Blockchain based income tax transfer pricing Blockchain suits transactions and could be applied to transactional taxes, such as VAT, withholding tax, stamp duties and insurance premium taxes.
Could blockchain transform tax entirely? Blockchain, error and fraud Blockchain makes fraud and errors far easier to detect because the system provides clear and transparent information about transactions and items in the blockchain based income tax. Download the full report How blockchain technology could improve the tax system.
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