Sharing economy turning challenges into opportunities for tax administrations

Transcription

1 Sharing economy turning challenges into opportunities for tax administrations Julia de Jong, Clement Migai, Prof. Jeffrey Owens Tax Systems Integrity in a Digital Age 5-6 April 2018 Sydney, Australia

2 Content Estimated size and growth of the sharing economy Tax implications vis-à-vis end-users of the digital platforms Tax implications vis-à-vis digital platforms in the context of employment law Measures proposed and introduced: Country experiences 2

3 What is sharing economy No universal definition of sharing economy Various labels are used: Sharing economy Collaborative economy Gig economy/ crowdsourcing Two broad categories* Asset-based sharing (utilisation of overcapacity of assets and consumer goods) Labour-based sharing (using professional skills to gain additional income outside formal contractual arrangements) * Crowdfunding not considered here 3

4 What is sharing economy Main outcome of digitalization of the sharing economy Peer to peer transaction is transformed into a tri-partite structure with online digital platform in the middle Digital platform: Searches and matches supply and demand Potentially removes limitations to the assets and services exchanged Enables global outreach Has in-built payment function Collects /records data of the transactions being carried out 4

5 Estimated size and growth of the sharing economy 5

6 Tax implications vis-a-vis end-users of the digital platforms Why sharing economy leads to lowering of tax revenues Tax breaks to support innovation, entrepreneurship and growth Lack of regulatory framework leads to the loss of oversight and conversion of sharing economy into informal or shadow economy, characterized by low tax compliance Displacement of payroll and social contributions taxes oftentimes with no compensatory measures 6

7 Tax implications vis-a-vis end-users of the digital platforms Main practical challenges for tax administrations seeking to design tax policy for sharing economy Identity of tax payers and lack of information on service providers Difficulty in identifying taxable income Non-disclosure of income earned Unfamiliarity with reporting requirements Enormous number of small transactions 7

8 Tax implications vis-a-vis digital platforms in the context of employment law Lack of delineation between the employment and tax law Uber case UK: Categorization of Uber as employer imposes rights and obligation on Uber under the employment law but does not automatically lead to taxation of Uber as employer or drivers as employees End-users (platform and drivers) relieved of obligations to asses and pay social insurance contributions 8

9 Policy based on full or partial integration of digital platforms Various approaches are designed taking into account existing tax systems, available resources and strategic digital outlook of jurisdiction a) Increasing tax breaks for the sharing economy and allowing for additional exemptions to be applied from the income earned below a certain threshold or to encourage voluntary compliance (UK, Denmark) b) Increasing awareness of the taxpayers of their tax obligations arising from the sharing economy and providing improved guidance to support compliance. (Finland, Italy, Canada) c) Establishing dedicated tax regimes that address sharing economy structures that may have simplified assessment and compliance algorithm (Italy, Belgium) 9

10 Policy based on full or partial integration of digital platforms Various approaches are designed taking into account existing tax systems, available resources and strategic digital outlook of jurisdiction d) Extend the existing provisions or introduce new obligations to allow for enhanced engagement of the online platforms to exchange information they record with the tax administrations (Estonia, Finland, Mexico, UK) e) Use digital techniques to obtain information necessary for the audit (Belgium) f) Obligate the sharing economy platform operators to collect taxes on behalf of the government and the tax administrations (Italy, France) g) Integration of techniques and tools provided by other disruptive technologies (e.g. AI, Distributed ledgers, smart contracts) 10

11 Julia de Jong Institute for Austrian and International Tax Law, WU (Vienna University of Economics and Business) Welthandelsplatz 1, Building D Vienna Austria Tel: 0043 (1)