BIZweek n°222 21 déc 2018
BIZweek n°222 21 déc 2018
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  • Parution : n°222 de 21 déc 2018

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  • Editeur : Capital Publications Ltd

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  • Nombre de pages : 10

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VENDREDDI 21 DÉCEMBRE 2018 BIZWEEK ÉDITION 222 Tax administrations have always looked to the latest technological developments to assist in the task of effectively collecting taxes from the population. The current shift in the digitalisation of the global economy is an opportunity presented to national tax collectors to make a change in the efficiency of their processes. The one big difference between the transformation of the physical economy and the changes that digitalisation is bringing to tax is timescale, says ACCA new report entitled ‘Technology tools and the future of tax administration’. In the field of illumination it took decades for electric light to start to displace earlier technology to any significant extent. Just a street or two down from ACCA’s London headquarters is the Savoy Theatre, the first public building in the world to be lit entirely by electric lights in 1881, over 130 years ago – and yet just a couple of streets away, Covent Garden is still lit by some of the 1,500 gas lamps that even today illuminate stretches of central London. We cannot expect anything like the same gradual approach to the adoption of digital tools for tax. The systems are centrally run and administered by the authorities, and the authorities can see all too clearly the advantages to themselves of the features discussed earlier. Not only that, but also the pace of change in the wider world has accelerated. Like the future, this change may not be evenly distributed, and there will be significant pockets of inertia for some time to come, but enough taxpayers are using digital applications in their everyday lives and businesses that the critical mass for change is already there. ACTA PUBLICA ‘TECHNOLOGY TOOLS AND THE FUTURE OF TAX ADMINISTRATION’REPORT The present (and near future) Just as the digital tools can benefit tax administrations, the development and implementation of technological innovation in the private sector is a constant race to improve performance. According to its most recent report  : Technology tools and the future of tax administration, ACCA (the Association of Chartered Certified Accountants) urges tax administrators to manage the risk of imposing restrictive technological requirements on taxpayers. At the extreme, regulatory constraints could deprive businesses of the opportunity to exploit the most economically efficient technology, stifling competition and even growth Wider economic changes The changing patterns of employment and consumption that new generations are adopting, or being forced into, are fundamentally revising the fabric of national economies. We hear plenty about the ‘gig’economy, about how future generations are more interested in experiences than ownership, and about how tools such as 3D printing are going to revolutionise production and consumption of physical goods. The detail of how those shifts will materialise has yet to become clear, but the domestic and global economies of the future seem set to look very different from those of the past. Nonetheless, while there is the scope for further integration of tax authorities’systems for streamlining the taxpayer experience and enhancing their own internal administrative efficiency, significant changes to the underlying bases of taxation seem unlikely in most economies. The confluence of political and practical constraints on radical innovation in the legal basis of taxation are unlikely to be challenged by whatever benefits new technological tools could offer at an administrative level. If there is to be a more fundamental revision of how society funds itself then, rather than being driven by the process (tax tools), it would need wider economic changes (to patterns of consumption and production ; tax base shifts, etc.) to force a departure from the recognised tax models. In the field of personal taxation, there is currently scope for distinguishing between treatment of salaried employees, subject only to income taxes, typically withheld by employers, on salaries and pensions, and businesses run with a profit motive where the individual owner remains responsible for the assessment of taxes on their own profits. Different tax tools could be developed for the different streams of taxpayer, but there is increasingly a recognition that the historical distinction between the classes of employed and self-employed individuals is being compromised by wider changes in patterns of employment and engagement, such as the rise of the gig economy and platform-based models of service and sales provision. Current models of business, and the way its profits are taxed, are built around familiar structures and conventions. The overwhelming majority of commercial economic activity takes place through one of three forms, sole traders, partnerships and limited liability companies, and the mechanisms by which society identifies and taxes the returns on those forms are well known. Financing through equity or debt captures the returns to capital, while taxes on employment income and self-employed trading are well established. Company accounts operate in common formats, while the measurement of profits, and costs, is all expressed in common and freely exchanged national currencies. But new patterns and models of businesses can challenge those formats. Crowdfunding of production models is increasingly popular, but how are the investors to be treated ? Are they customers who have simply made a down payment on the product, or investors receiving their dividend in kind ? With the development of virtual and cryptocurrency technologies, new business models are blurring the distinctions between traditional forms, and challenging the fundamentals of taxation while they are at it. Software developers have already experimented with a non-incorporated business structure, crowdfunded entirely in cryptocurrencies, something that poses challenges beyond the tax field and affects the corporate reporting and audit worlds. Such a structure would sit outside every known framework of transparency, accountability and regulation. In 2016, the Ethereum-based DAO (decentralised autonomous organisation) hit the headlines – first for crowdfunding a non-incorporated business venture in cryptocurrency (Waters 2016a), and then for demonstrating why it is not a good idea to throw away several hundred years’of social development in favour of an untested software model, when it was shown to be insecure (Waters 2016b). Huge changes ahead Enthusiasm for those models may have been tempered, but they will come in due course, and for individual transactions there are already clear benefits of blockchain technology-based applications ; adding a ‘pay the tax’line into those contracts could have significant implications for compliance. There has been a massive growth in borderline service models in transport service provision, with the rise of transport platforms, whether these are displacing existing taxi and public transport networks or satisfying the demand for delivery services, themselves driven by the growth of online purchasing. The individuals providing the services are often characterised by the parties as self-employed but their work may bear many of the hallmarks of what has traditionally been treated, and taxed, as employment. Quite apart from the shorttermcompliance implications of this change, there will be longer-termimplications for the underlying structure of tax systems, as models built on a system in which employees stay in the same single static relationship for years on end start to break down. For production there are also huge changes to come. There is another physical revolution in manufacturing approaching, as automation reverses the historical trend for manufacturing businesses to base production where labour is cheap. Already identified in the clothing industry (Hoskins 2016), there is potential for ‘smart factories’, where the human labour has been mostly replaced by robots, to re-onshore industrial and high-tech production facilities, bringing them back to the developed economies where demand is strongest. Taking into account proximity to market and availability of highly skilled staff to oversee the robots, the move makes economic sense for a business, and reduces the environmental costs associated with shipping the completed product half way around the world. Tax implications arise from these technological changes. The most obvious one is that the local employment taxes raised on the factory labour will fall. Dependingupon the structure of the group and proportion of value added by the manufacturing process, there will be a relocation of a proportion of the profit arising on the final sale of the goods ; whether the taxes shift to follow this profit will dependupon the legal arrangements of both the group and each jurisdiction in which it operates. But there are wider implications. The passage of the finished goods from one customs jurisdiction to another will have given rise to duties that will probably now be chargeable elsewhere. Transportation and haulage activities will have declined, and with them the associated tax take. A brave new future Looking further ahead, a report by the investment bank ING (2017) estimates that as much as 40% of cross-border trade could be eliminated by 3D printing of components and even of finished products. That may result not simply in factories moving but in many cases in their ceasing to exist altogether as the creation of complex products such as cars could all be undertaken in one place, with components previously machined elsewhere and brought on site simply being printed off internally from licensed patterns. Indeed, the report’s projections cited the automotive sector, with its proliferation of complex components, as one of the sectors most deeply affected by this technological advance – but there are other technologies likely to have just as significant an impact on the wider business world and its interaction with the tax system. The move away from fossil-fuel-powered internal combustion engines to electric power will reduce the number of moving parts and required complex components in each vehicle produced, affecting the tax profile of the production process, while the big impact of the consumer side will be reduced consumption of heavily taxed fossil fuels at the pump. The digital economy is giving us a brave new future in which it is increasingly difficult to assess the point in the supply chain at which value creation actually happens – and so perhaps the current models of profit taxation will retreat and be replaced with a broader reliance on the consumption taxes, which as we have already seen is the area where digital tools may perhaps have the biggest impact on our daily experience. [Source  : Technology tools and the future of tax administration report] 6
VENDREDI 21 DÉCEMBRE 2018 BIZWEEK ÉDITION 222 CHRISTINE LAGARDE MANAGING DIRECTOR INTERNATIONAL MONETARY FUND 17.12.18 POST SCRIPTUM CONFERENCE The Future of Work in sub-Saharan Africa Why are we discussing the future of work ? You might argue that policymakers face enough challenges just thinking about today’s jobs. But sometimes you need to step into the future, look back from there at the present, and gain a new perspective on how to tackle both today’s and tomorrow’s challenges In the words of the African proverb, « The eye crosses the river before the body. » So, let us look into the future, decide where we want to go, and then chart the right course to get there. I will first look at the forces that will shape the future of work in sub-Saharan Africa. Next, I would like to introduce three different scenarios of how these forces might impact the economic prosperity of the region. Finally, I will suggest some policy areas that governments can pursue to create an environment for inclusive growth and job creation moving forward. I hope these ideas spark your thinking during this conference. I. A Quick Look Back But before we get to the future, let us take a quick look back. Sub-Saharan Africa has seen relatively robust growth for almost two decades. The region has created almost 9 million jobs per year since 2000, on par with the rise in the labor force. The share of the population living in extreme poverty decreased from 59 percent in 1993 to 41 percent in 2015. Ghana has done particularly well — in fact it is one of only 9 sub-Saharan African countries that met the Millennium Development Goal of halving extreme poverty. At the same time, most of the new jobs throughout the region are in agriculture and traditional services. Far too few have Cont’d on page 8 7

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