Cashless payments and their implications on tax systems

This block analyzes how cashless payment methods (i.e. credit/debit cards, contactless technologies, digital wallets, online banking, mobile payment apps, virtual currencies, etc.) are impacting existing tax systems, what challenges and opportunities they raise in the field of taxation and how tax regimes could be designed in order to improve tax compliance and exploit the benefits of electronic payments. The topics explored include:

• Taxation of crypto-assets and virtual currencies (including hard forks, stable coins, central bank digital currencies, decentralised finance, etc.)
• Cashless payments and the shadow economy
• Cashless payments, pre-filled tax returns and enhanced taxpayers’ services
• Reporting obligations imposed on payment service providers (PSPs)

For a description of these specific topics, please see the project’s research programme.

Online platforms and their impact on tax systems

This block analyzes how online platforms (i.e. search engine, social media, marketplaces, ride-sharing, short-term rental, etc.) are affecting the operation of existing tax systems, how countries across the globe are dealing with this phenomenon and how should prospective tax regimes be design in order to exploit the benefits and overcome the challenges posed by a platform-based society. Some of the specific topics explored are: 

• Platforms’ tax avoidance
• Users and value creation
• New types of (digital) taxes on platforms
• The taxation of platform users
• The role of platforms in the tax system: Reporting, due-diligence and collection obligations

For a description of these specific topics, please see the project’s research programme.

Technology: The impact of AI and automated decision-making (ADM) in taxation

This block analyzes the challenges and opportunities raised by AI and automated decision-making systems (ADM) in the field of taxation. Specifically, it explores how governments around the globe are using AI and ADM systems for taxation and how tax policy and tax administration should be re-designed in order to benefit from the use of these technologies. This implies defining how AI governance principles (i.e. human agency and oversight, transparency, non-discrimination, etc.) apply in taxation and how general AI legal frameworks should be embedded with tax systems design and implementation.

Some of the topics explored herein are:

• Use of AI for improving tax administration
• Use of AI for fighting tax fraud
• Using AI and ADM systems for applying Anti Tax Avoidance Rules
• Using technologies to achieve tax transparency

For a description of these specific topics, please see the project’s research programme.

Technology: A blockchain-based tax system?

Apart from AI, there are many other technologies such as blockchain, cloud computing, the internet of things, etc. that raise significant challenges and opportunities for the design and operation of tax systems. This research block analyzes how these other technologies could be used to improve the tax system. This includes exploring whether it is actually possible to implement a blockchain-based VAT system (alone or coupled with a VAT cryptocurrency) to prevent and detect VAT fraud in the short or medium term, as well as whether this technology could be used to solve more specific problems such as easing taxpayers’ compliance regarding transfer pricing documentation, integrating data registries among tax administrations and other public agencies, etc.

The objective of this research block is to identify opportunities provided by new technologies - other than AI - to improve the operation of tax systems and to define the polices, principles and legal requirements that these tools should meet when applied by tax administrations and policymakers (e.g. effectiveness, competence, transparency, privacy, non-discrimination, accountability, accuracy, and fairness, etc.).

Big data governance: Ensuring an effective protection of taxpayers’ rights

Technological developments have facilitated the gathering and processing of citizens’ data. This has led to a substantial increase in the volume of sensitive information accessible and/or processed by businesses and tax authorities. However, the creation of this huge pool of data may raise concerns in terms of security, data protection and fundamental rights.

This research block analyzes the challenges and opportunities raised by the cashless, platform-based and technology-driven society in relation to big data governance, privacy and data protection. It  explores what specific policies, principles, practices and standards should guide the design of tax regimes in order to ease big data administration and guarantee a better protection of taxpayers’ rights.

This includes analyzing: (i) how do governments gather, store, process and use data arising from third-party reporting (e.g. platforms, PSP, employers, etc.), e-invoicing, online cash registers and other sources (e.g. automatic exchange of tax information) as well as; (ii) current data protection rules applicable in different countries around the globe, especially those in the EU, the US and China. This analysis pays special attention to the legislation that explicitly address automated decision making (ADM) systems (e.g. the EU’s General Data Protection Regulation) and aims to identify the boundaries of what can and cannot be done by tax administrations, also with reference to case law in this area.