Technology is fast becoming an indispensable tool for tax authorities. Although technology can enable taxpayers to use more sophisticated methods to evade tax, it can also be a powerful tool for tax authorities to swiftly identify such methods. A number of tax authorities have already achieved successes in preventing and detecting tax evasion and fraud through the use of technology solutions, which has led to the recovery of billions of euros in tax revenue.

Tax challenges arising from digitalisation

More than 110 countries and jurisdictions have agreed to review two key concepts of the international tax system, responding to a mandate from the G20 Finance Ministers to work on the implications of digitalisation for taxation.

The members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shiting (BEPS) will work towards a consensus-based solution by 2020, as set out in their Interim Report on the Tax Challenges Arising from Digitalisation.

The interim report includes an in-depth analysis of the changes to business models and value creation arising from digitalisation, and identifies characteristics that are frequently observed in certain highly digitalised business models. Describing the potential implications for the international tax rules, the Interim Report identifies the positions that different countries hold, which drive their approach to possible solutions. These approaches range from those countries that consider no action is needed, to those that consider there is a need for action that would take into account user contributions, through to others who consider that any changes should apply to the economy more broadly. The interim report lays the ground to move forward at the OECD towards a long-term multilateral solution in the next phase of work.

Technology tools to tackle tax evasion and tax fraud

This report provides an overview of some of the technology tools that tax authorities have implemented to address tax evasion and tax fraud, focussing on electronic sales suppression and false invoicing. The report also includes a more technical catalogue of these technology solutions, with a view to encouraging other tax authorities that are facing the same types of risks to draw on that experience. Furthermore it discusses complementary work that tax authorities are undertaking to address the cash economy and sharing economy, which, although not types of tax evasion and fraud themselves, can facilitate them.

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>> Press release, 31 March 2017:  Technology offers critical solutions to prevent, identify and tackle tax evasion and tax fraud, says OECD

Addressing the tax challenges of the digital economy

This report sets out an analysis of the challenges the digital economy poses for international taxation in the context of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project action plan. It notes that as the digital economy is increasingly becoming the economy itself, it would not be feasible to ring-fence the digital economy from the rest of the economy for tax purposes. 

It aims to identify the main difficulties that the digital economy poses for the application of existing international tax rules and develop detailed options to address them, taking a holistic approach and considering both direct and indirect taxation.

>> Access the report and further information