“LINDAS” Tax Administrations (*)

Try to google the expressions “Blockchain + tax administration” and you can see appearing about five millions results, and probably many more if we use some other related search words.

Among these results, we find articles of a number of new tech gurus who promise us a happy Arcadia if we use the blokchain technology to optimize all kinds of processes, including many that are currently fully developed without resorting to this technique.  It would appear that the tax administration is infected by blockchain and this infection spreads like yellow fever without respecting anybody, spreading without control by subjects interested financially in its expansion.

If we are a bit lazy and we just type in “google” these four simple letters “ B”, “E”, “P”, “S “ we can see appear 3.3 million results. Overwhelming. Almost as much as the reports of the 15 actions BEPS, the developments in each of them, or the Inclusive Framework.  No brainy doctoral thesis, no small media article, no self-promoted blog post or similar, will avoid addressing this subject, about which both defenders and detractors have appeared ad nauseam like mushrooms.

I do not want to insist and talk of searches of terms such as “related party transactions” or “transfer pricing” whose results would be even bulkier or at least similar.

Definitely, tax administrations want to appear trendy.

What is trendy now in the tax administration world, dear readers? What does it take? Perhaps the coolest it is to be an expert engineer in blockchain, in transfer pricing and BEPS – a veritable cocktail with a powerful viral load.

This expert will be a real influencer in the tax world.  He will be able to “create value”, “empower” and “evangelize” us with a doctrine about the benefits of these technologies with a strong capacity to win new adherents to the sect.

Moreover, as we follow fashion and invent words and concepts to escape the reality around us and present it as friendly as possible, there are still many of the classic problems of tax administration that we do not follow anymore, out of fear of being “démodé”, outdated.

What have we done with informality in recent years? We admit that informality often does not have a tax component, since many informal taxpayers would not be forced to declare- but this does not justify inaction on the issue and I fear that the remedies being applied are ineffective. Moreover, the time flows, societies are aging and social problems are widening.

What have we done with the fraud of professionals? We turn to them, for example, to hire them for a project, in order to examine us or heal us and continue to earn cash and, with a little order in their accounts, they can hide a large part of their income. In many cases, they enjoy social benefits linked to income level against workers or employees who have their incomes controlled.

What are we doing with the fraud through smokescreen societies that allow the hiding of huge amounts of revenue from the Treasury, eluding personal taxation? What about the issue of accumulation of unpaid tax debts? What do you say in this regard?

It is clear that there is also a design problem with the tax systems. However, in a world where the speed of change appears to be at odds with reflection, the purpose of this post is to draw your attention, with a high dose of Manichaeism, on the need not to lose sight of the “basic” and not just going with the flow of fad and fashion.

(*) In the original post in Spanish, the tile is “Administraciones tributarias pritis”.  In Panama, the term “Priti” is widespread to refer to things that stand out for their beauty or attractiveness. Derived from the English “pretty”. In Spanish, the equivalent is “Lindo, linda”…

Disclaimer. Readers are informed that the views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group the author might be associated with, nor to the Executive Secretariat of CIAT. The author is also responsible for the precision and accuracy of data and sources.

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