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The UvA’s Amsterdam Centre for Tax Law has recently entered into a number of exciting new partnerships to help them conduct research into the design of fair, efficient and fraud-proof tax systems. Ernst & Young (EY), Microsoft and Netflix will support the research project 'Designing the tax system for cashless, platform-based and technology-driven society' (the ‘CPT project’). In addition, the tax authorities of the City of Buenos Aires have formally expressed their intention to join the initiative. The aim of the ambitious CPT project is to provide the building blocks – based on scientific research – for making tax systems fairer, more efficient and more difficult to circumvent: ‘Paying the fair share in the right place.’

REC A (photo: Maartje Strijbis)
Amsterdam Law School

Whenever major economic or social changes occur, tax systems must follow suit. Working from the assumption that society is in the process of transitioning to a new economic model, accelerated by the corona crisis, the CPT project examines how tax systems can be designed and structured for a society based primarily on cashless payment methods, online platforms and digital technologies, such as artificial intelligence and blockchain. The ultimate goal is to arrive at concrete recommendations that not only help different stakeholders – such as governments and commercial organisations – address problems under current tax systems and/or introduce structural tax reforms, but also provide building blocks for the redesign of tax systems.

Moving to the next level

‘Our society is becoming increasingly digital. It is therefore high time to bring together data scientists and tax lawyers to find out how technology can help us design better tax systems,’ says Dennis Weber, professor of European Corporate Tax Law and leader of the CPT project. ‘Over the next few years, we will see an increase in the use of algorithms to determine whether or not someone is paying enough tax on their income. This can be very effective, but we must not lose sight of the fundamental rights of citizens. That is why in our project we are investigating, among other things, how we can ensure that the use of AI in the tax field is reliable and beneficial for everyone in society. So-called distributed ledger technology such as blockchain offers governments unique opportunities to design tax systems that are less susceptible to fraud. However, research in this area is still in its infancy and our commitment is to take it to the next level.’

‘This is a very much needed initiative,’ adds Raffaele Russo, chair of the Advisory Board of the CPT project and former head of the OECD BEPS project. ‘The world is changing and the corona pandemic will likely accelerate that process. It is therefore welcome that academia, in collaboration with public and private stakeholders, is devoting time and resources to addressing issues that will become urgent sooner than most expect. In my opinion, tax systems should be easy to comply with and difficult to circumvent, and technology should be an enabler of that very basic principle.’

Weber's team has recently been strengthened by a number of renowned researchers joining the project. For example, on 1 September, Daniel Smit, head of the Scientific Tax Knowhow department at EY, began his appointment as professor by special appointment of Taxation of the Digital Economy at the UvA. Also, three international researchers recently moved to the UvA to conduct research under the umbrella of the CPT project.

Growing number of partnerships

As an independent and inclusive initiative, the CPT project is open to all governments, NGOs and companies that want to contribute to it. In addition to the support of newly acquired partners EY, Microsoft and Netflix, as well as the letter of intent from the Tax Administration of Buenos Aires’ City (AGIP), more tax authorities and commercial organisations are expected to join the CPT project in the coming months.

The initiative is also supported by the Dutch Association of Tax Advisers (NOB), the Dutch branch of the International Fiscal Association (IFA) and two Italian law firms: Maisto e Associati and Gatti Pavesi Bianchi Ludovici. Part of the project is financed through the National Sector Plan Law 2019-2025, within Digital Legal Studies. The project is also part of the Digital Transformation of Decision-Making initiative of the Amsterdam Law School.