Article

Blockchain technology and its potential in taxes

Revolution in conducting payments, storing data and performing transactions

December 2017

In November 2008, the Internet quietly welcomed a mysterious white paper, written by a person or persons under the pseudonym Satoshi Nakamoto. The publication described a new, digital currency based on the idea of cryptographically chaining blocks of data, designed to rely solely on computer technology, detached from any intermediaries. That was the dawn of Bitcoin. For years, Bitcoin grew in popularity and value, but the underlying technology, Blockchain, remained largely unnoticed or associated strictly with Bitcoin. Today, Blockchain has evolved from being a quiet presence behind Bitcoin to a technology that could potentially revolutionize the way we conduct payments, store data and perform transactions.

The digital age is also molding taxes into an entirely different shape, by not only changing the relationship between taxpayers and tax authorities, but also altering the way we pay taxes or submit and store information. The potential of digitizing taxes has been noticed by many countries, and new solutions arise, such as SAF-T in Europe or real-time electronic invoicing in South America, such as Brazil. Propelled by a desire for greater efficiency and better compliance, tax authorities seek to gather and analyze information digitally, providing a better environment for creating foolproof solutions and software. On the other hand, taxpayers also expect that the process of taxpaying will become easier and less time-consuming. Blockchain is without doubt one of the most promising technologies because of its ability to deliver reliable real-time information from many layers to a large audience, as is the case with taxation, especially on an international level. At the World Economic Forum in Davos in 2016, 816 observers and technology specialists were asked when Governments would begin to collect taxes using Blockchain, showing that on average the expectation is that it will happen in 2023 or 2025.2

https://www.coindesk.com/world-economic-forum-governments-blockchain/

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Blockchain step-by-step

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