The tax world is changing, and fast. Globalisation and the proliferation of new technologies have created an environment in which it is increasingly hard for authorities to collect traditional income and corporate taxes.
Assets can be shifted across the world with the lightest click or swipe. Nevertheless, the demands for increased public spending grow daily. Health and social care costs for ageing populations living longer on their own thanks to technological progress threaten to bankrupt mature economies in coming decades.
Populist resentment at a perceived footloose parasitic global elite is, as in France last week, erupting into resistance and violence. The OECD has repeatedly pointed out that sales and consumption taxes, which are at least in principle tethered to particular transactions in particular locations, are already the key areas of Government revenue growth and will remain so for the foreseeable future. Chief among these is VAT.
In the eyes of EU and global tax authorities, all roads lead to indirect tax digitisation. As we move into a world increasingly organised by and around technology, digitisation will be critical to the effective future-proofing of tax collection. Authorities are anxious to shift rapidly to big-data driven collection and enforcement, as it offers an unrivalled possibility to immediately spot irregularities and errors, and to leverage fines and penalties with greater efficiency…