Google's Driverless Cars Collide with Tax Departments

  • November 21, 2013

Gartner's annual IT Expo is a great place to go if you want to be thrilled by possibility -- and terrified that the world might be passing you by.

Here's a statement from this year’s event that sticks with me: "Google is in the automotive business because they care about what you're going to do in your car when you don't have to drive it anymore." And you know what? Tax professionals should care about what Google is doing in our cars because this type of breakthrough promises to shift how we do our work.

Let's break that down for the sake of processing some pretty big ideas.

Google has entered into the automotive business with its driverless car technology initiative. (Here's some additional background if you're not familiar). The technology is unbelievable: it includes a combination of cameras, radar and other sensors, scans millions of data points surrounding the vehicle, enabling the car’s computer to see in the dark, anticipate (and suggest alternative routes to) traffic snarls miles away, dodge deer and take defensive measures when neighboring drivers drift. The steering wheel moves by itself and, even at 65 miles per hour, drivers can relax, snap pictures or carry on a conference call.

One big idea conveyed in the Gartner presentation concerned these and other activities we “drivers” (after all, we will be able to switch off the automatic controls whenever we want or need to) will conduct in our cars once they start chauffeuring us to destinations based on our voice prompts or simply because they “know” our habits and schedules.

I assume we will produce and consume content for work and recreational purposes in our vehicles; our car will become our office, home theater and shopping center. Think of the additional benefits of being able to multi-task for your morning commute, take that important work call, prepare for your morning meeting or shop online for your niece’s upcoming birthday. Now – and here’s where thrilling shifts toward staggering – think of the tax implications of this new automated and mobile work space.

I’ll leave you with a couple of questions that came to me as I pondered the impact of driverless cars.

First, what are the tax implications for an innovation of this magnitude? Significant and sudden changes in the types of companies that other companies “buy from and sell to” can result in markedly different legal-entry structures for transfer pricing agreements, which would qualify as a tax game-changer.

Second, what will increasingly mobile tax professionals look like as they leverage driverless cars among other breakthroughs to do their jobs better? How does this mobile tax professional collaborate with colleagues, advisors, auditors and other partners? What systems will need to be in place to support this mobility? And, inevitably, how will this new – and newly blurred – work/life space be taxed? The process of addressing these and related questions promises to thrill and, at times, terrify tax professionals.

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.

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