How Blockchain Is Transforming Tax Compliance
Pilots and projects are starting to emerge in businesses and government agencies alike. What does blockchain mean for the future of taxation?
Two whitepapers, published jointly by Vertex, Microsoft and PwC, explore that question. You can download Blockchain for Tax Compliance Part 1 and Part 2. I co-wrote these papers – the initial publications in a planned series on the topic – with fellow experts at Microsoft and PwC. I found the experience enjoyable and thought-provoking.
Blockchain for Tax Compliance
Vertex, Microsoft and PwC explore how emerging blockchain technology reduces costs, improves tax collection and encourages compliance and organizational trust.
Businesses are digitizing rapidly, yet tax administrations, in many cases, are not. This leaves companies’ compliance processes hampered by manual tasks and disparate digital standards across the various jurisdictions in which they operate. We at Vertex see the emergence of blockchain as a unique opportunity to tackle these challenges.
Part 1 of Blockchain for Tax Compliance offers a useful introductory overview of the technology, including typical use cases, the types of networks involved, and the defining characteristics of blockchain within the distributed ledger technology category. It also delves into the considerations for how the government can use blockchain. In addition, the report discusses blockchain in the context of companies’ broader digital transformation, including the data classification and governance considerations that arise when implementing tax compliance infrastructure.
Corporate tax leaders will find a wealth of insights and practical suggestions in the core section on designing blockchain applications for tax compliance, including:
- Identity and security planning;
- Distributed databases for the exchange of information between taxpayers and tax administrations; and
- Ways to integrate tax payment flows.
In contributing to these white papers with our partners, our objective at Vertex is to start a conversation between taxpayers and tax administrations on how they can best realize blockchain’s enormous potential. We look forward to our continued participation in this global dialog in the months and years to come.
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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