By now, most tax professionals are aware of blockchain and related distributed ledger systems and the rise of what some pundits refer to as the “Internet of Value.”
If you’re not yet familiar with the technology, here’s a helpful introduction from Vertex Director of Client Relations John Wilson: “Blockchain is a decentralized, immutable public ledger of transactions that no single person or company owns or controls. Instead, every user can access the entire blockchain. Every transfer of title (whether that involves real property, tangible property, or digital property) from one account or individual to another is recorded in a secure and verifiable form within a closed network.”
Blockchain technology is already disrupting the financial software sector and attracting the attention of financial services providers. And it will soon drive long-term changes among a broad swath of corporate functions within nearly all companies and industries. Take the supply chain function, for example. Blockchain can deliver more efficient transactions at a lower cost by digitizing information flows, tracking goods with increased visibility and accuracy, and automatically structuring the financing of goods during transit.
In the tax realm, blockchain has great potential as a reporting solution. Governments stand to gain from the transparency of blockchain technologies to close tax gaps by targeting fraud and tightening compliance, as this Tax Notes International report details.
Accounting, finance and tax professionals should start preparing now for the challenges and opportunities created by blockchain’s radical disintermediation of transactions. On that score, The Accounting Blockchain Coalition is a useful resource. Launched by industry leaders from accounting, law, tax, technology and higher education, the coalition’s mission is “to educate businesses and organizations on accounting matters relevant to digital assets and distributed ledger technology, including blockchain.” As president of the coalition, I invite you to become a member and help us to develop a knowledge-sharing platform that will foster best practices and shape the future of the blockchain economy.
Finally, I delve into a little more detail around the implications of blockchain for finance and tax professionals in this FEI Daily article.
Please remember that the Tax Matters provides information for educational purposes, not specific tax or legal advice. Always consult a qualified tax or legal advisor before taking any action based on this information.