EY tests blockchain for ‘near-real-time’ cross-border tax compliance

EY has announced the completion of a project that aimed to use blockchain technology to address “certain inefficiencies and complexities” in cross-border withholding tax (WHT) systems, specifically those related to dividend payments like Ireland’s Dividend Withholding Tax.

The project also included partnership with the tax authorities of the UK and the Netherlands, as well as BNP Paribas, Citibank, JP Morgan, Northern Trust, APG Asset Management, PGGM Investments, and academics from Vienna University of Economics and Business and the University of Exeter.

The system tested in the project, which is called TaxGrid, builds a “shared record book” between financial intermediaries and tax agencies of dividend transactions. According to EY, this system can “automate, decentralize and share tax and financial information” in a secure fashion, “enabling appropriate and accurate taxation of dividend income at source”.

TaxGrid is said to include a number of security and privacy technologies including zero-knowledge proof systems, in which a computer agent proves it possesses some secret piece of information without having to take the risk of transmitting that information over any network.

Kate Barton, EY’s global vice-chair for tax, commented: “This groundbreaking cross-border project illustrates that innovation and technological development – powered by collaboration – can facilitate tax policy that works for a wide range of stakeholders. The broad tax ecosystem can benefit from withholding tax processes that are more efficient and more secure. This will reduce costs, increase transparency and move tax compliance into near real-time.”

Barton continued: “The intention is to continue these multi-stakeholder discussions on ways to engage with other government and industry representatives. We want to address the legal and regulatory changes required to achieve a wider application of the WHT solution to help the global withholding tax challenge.”

According to EY, the TaxGrid system has the potential to “improve tax compliance to near-real-time” which will, if implemented, benefit “investors, financial institutions and tax authorities alike”.

Jeffrey Owens, director of the WU Global Tax Policy Center at the Vienna University of Economics and Business, added: “Our analysis of a blockchain solution to withholding taxes showed that, by drawing on countries’ best practices, solutions to some interesting legal issues can be found, that enable governments and industry to benefit from near real-time access to information and improve the functioning of international capital markets.”

Last month, an EY report said Ireland is making a strong comeback in merger and acquisition activity. This year, the World Economic Forum singled out five start-ups working on the bleeding edge of blockchain technology.

The post EY tests blockchain for ‘near-real-time’ cross-border tax compliance appeared first on Silicon Republic.

Related Articles

Building A Conversational N.L.P Enabled Chatbot Using Google’s Dialogflow

The 2019 Capgemini research institute’s report published after a research on the use of chat assistants showed a drastic 76% increase in customer satisfaction from organizations where chat assistants where built and incorporated into their services. But how does Dialogflow, a product from Google’s ecosystem, aid developers in building chat assistants and contribute to this quota?


Your email address will not be published. Required fields are marked *

Receive the latest news

Subscribe To Our Weekly Newsletter

Get notified about chronicles from TreatMyBrand (TMB.) directly in your inbox