Topics to discuss during coffee

Finally. We had our technology meeting in October, and the evaluation was positive. The expectation of having another meeting was expressed face-to-face and online by Tyrians and Trojans, so we could say, without false modesty, that it went well. I will not write about the event, already Juan Redondo did it, as a premiere in this space.

In my “Keynote“, that initial presentation whose name is difficult to translate, I offered, in conclusion, three aspects of the near future, which in my opinion will have profound implications for the tax administrations.

These elements are:

• New developments in artificial intelligence, ranging from driverless cars to digital assistants, and sooner rather than later they will come within the framework of the tax administration with a capacity to transform the working environment. They will provide comparable services, keeping the distances, to the introduction of personal computers in the workplace at the end of the 80’s and early 90’s. At that time, the introduction of word processors, probablyWordstar, and electronic sheets, probably Lotus 123, increased the productivity levels of the few officials who could use them, but quickly these tools were here to stay and transformed the working environment. That transformation saw personal computer added to each desktop, with each official writing their own letters and reports, while you could see how certain work positions were transformed or vanished. The incorporation of these digital assistants to the work environment seems to me a matter of time only. I don’t know who will win the race: Cortana, Alexa, Siri? -the Google assistant, perhaps – but what I know is that this competition will improve any technologies that already exist and are already impressive, involving the understanding of natural language and the development, not of simple answers, but specific answers or actions. I am sure that soon those assistants will appear to answer internal and external, more complex questions. I have named it Astrid (from its Spanish acronym) – the Digital Tax Assistant.

• The developments in 3D printing, that already stopped being a game for printing small designs, and that is used to print parts of machines, parts of clothing, some bridge, some houses, while research takes place to use it in the printing of human organs. If this technology is strengthened as it seems it will occur, the effects on business models are huge. The possibility of eliminating partially or completely the intermediaries in manufacturing processes. This has happened in several sectors, like selling books and airline tickets, for example, but now it would extend to production processes (would perhaps even include industrialists?) with implications for jobs, certainly, but also in the tax aspects, particularly in indirect taxes. The possibility to send designs to be printed through the network in another country extends the problem of control over the import of intangible assets to physical assets. Concepts such as origin for customs issues must be redefined. The printing 3D has a huge disruptive potential; it could be to the manufacturing of goods what the digitization of music is to the music.

• Blockchain. The technology behind Bitcoin already has implications in the tax world, about which I wrote in previous posts It is today studied seriously for its application in other less dark environments that those usually associated with that encrypted money. The possibility of having a record of things, highly secure, encrypted, without a centralized control and without owner opens up possibilities for use in different areas ranging from identity authentication, to the implementation of timestamps in workflows, the implementation of alternatives to centralized systems controlled by a third party, for example, the bank. Blockchain allows, in short, that different parties keeps adding in a secure and unalterable way elements to a previous record, providing information or adding elements to the previous situation, with knowledge of all stakeholders, without the need of having a trusted third party that manages the system. Within the tax administration, there may be interesting uses. The first that occurs to me, and that I mentioned in Miami, is the implementation of negotiable Tax Refunds Certificates, in those countries where they are used. But a more direct application in countries that have large and successful implementations of e-invoice would be the implementation of the event management, using blockchain in the documents. This would allow that all the interested knew not only of the emission of an invoice, but the time of the payment, of the delivery of goods or any novelty that occur. Among those, an extremely useful one would be the implementation of factoring, so when those outstanding invoices are negotiated, it would be known with certainty if they are still unpaid, if is only a partial value, or the negotiated value, without need of a reliable third party in the process. Another possible blockchain application in the tax administration was presented in an article of TaxNotes “Blockchain Technology Might Solve VAT Fraud” and in my opinion it deserves to be studied. It would be the implementation of a kind of currency similar to bitcoin, which would be used exclusively used for the management of credits and debits of the value-added tax and which would avoid that the associated flow take place in common currency, decreasing (or hampering) the possibilities of fraud.

These are interesting topics, and surely controversial. I am sure that some among you will be skeptical and others will see more opportunities than threats. As for me, I am of those who tend to see the glass as half full, and I invite you to discuss these issues with a coffee or, why not, at a place such in the second meeting of technology in 2018?

Greetings, and from now on, happy year 2017!

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