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Global Tax 50 2017: Blockchain

Blockchain is a new entry this year

Although lumps of code don't generally make the Global Tax 50 list, blockchain has earned its place with its huge potential to revolutionise how tax administration, compliance and data exchange happens.

Blockchain, the distributed ledger technology, has the potential to offer transparent transactions, but at the same time restrict who has access to the data. It can eliminate fraud with the ability to trace every transaction and verify its legitimacy. The tamper-proof technology could also make tax returns a thing of the past with real-time information being updated across each network of users.

Deloitte describes the technology as "redefining what it means to transact", and PwC says blockchain could "cut costs and add value within a business, between businesses, between businesses and consumers, and between businesses and governments".

The technology could solve the arguments we are seeing today on whether country-by-country reports should be public, or whether beneficial ownership registers should be accessible by anyone with the choice of open or closed networks. If you have a technology in place that allows you to be transparent, but at the same time select who sees your data and how much of it, and also in a secure environment, everyone could be a winner.

Already, several governments are looking into how to implement blockchain technology into their tax systems.

China's tax administration is exploring the use of blockchain as its digital data on taxpayers grow to ensure the information is secure. It is also considering using the technology to deal with the use of false identities and ensure effective registration and authentication of taxpayers. Meanwhile, smaller countries are also looking into blockchain's applications. Rwanda, for example, is considering introducing blockchain to help administer its VAT system.

"If you ask me which countries are leading the digital tax administration, the answer is Singapore, Estonia, Finland, Israel, and Rwanda," says Professor Jeffrey Owens, director of WU Global Tax Policy Center. "Why those five countries? Because they're small so they're more agile because the government has said right from the outset it wants a digital society. To get a digitalised society, it needs a digital government."

"We are at this stage now where, particularly with things like blockchain, everybody sees the potential, but nobody is quite sure about is and so nobody takes the leap. So, what you get is a whole series of experiments. Sweden is looking at how it can use blockchain to help it tax land and property, and Finland is beginning to use blockchain for payroll taxes," says Owens. "So, in a sense, we're at this stage were nobody's making the big jump but instead taking small steps. Let's see how it works in that particular area."

But, as an old Chinese proverb says, it is better to take many small steps in the right direction than to make a great leap forward only to stumble backward. If the experiments work and the technology offers the security and benefits that both taxpayers and tax authorities want, blockchain could hold the answer to a lot of tax matters.

The Global Tax 50 2017
View the full list and introduction
The top 10 • Ranked in order of influence
1. US Tax Reform Big 62. Dawn of the robots
3. The breakdown of global consensus4. The fifth estate
5. Margrethe Vestager6. Arun Jaitley
7. Sri Mulyani Indrawati8. Pascal Saint-Amans and Achim Pross
9. Richard Murphy10. Cristiano Ronaldo and Lionel Messi
The remaining 40 • In alphabetic order
Tomas BalcoPiet Battiau
Monica Bhatia Blockchain
Rasmus Corlin ChristensenSeamus Coffey
Jeremy CorbynRufino de la Rosa
Fabio De Masi The Estonian presidency of the Council of the European Union
Maria Teresa Fabregas Fernandez The fat tax
Maya ForstaterBabatunde Fowler
The GE/PwC outsourcing deal The Gulf Cooperation Council (GCC)
International Consortium of Investigative Journalists (ICIJ)Meg Hillier
Chris JordanWang Jun
James KaranjaBruno Le Maire
John Pombe Joseph MagufuliCecilia Malmström
The Maltese presidency of the EU CouncilPaige Marvel
Theresa MayAngela Merkel
Narendra ModiPierre Moscovici
The European Parliament Committee of Inquiry into Money Laundering, Tax Avoidance and Tax Evasion (PANA) The Paris Agreement
Grace Perez-NavarroAlexandra Readhead
Heather Self TaxCOOP
Tax Justice NetworkDonald Trump
United Nations Committee of Experts on International Cooperation in Tax Matters WU Global Tax Policy Center

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