Our civilization is facing yet another revolution. We are entering the fourth industrial revolution.
Following the age of mechanical production, mass production and digital age. The fourth
industrial revolution revolves around the transformation of the society through cyber-physical
systems. It is the very definition of embedding technology within the civilization in multitude of
disciplines, up to the extent of our own human body. This advancement bred new technologies
such as robotics, artificial intelligence, genome editing and blockchain - a technology that is
predicted to transform how we handle information, transaction and economy.
The blockchain in its simplest description is an incorruptible digital ledger (called blocks) of
transactions linked using cryptography. Information in the block is shared, duplicated and
regularly updated across a network of computers or nodes. The information in the block cannot
be controlled by a singular being or user as verification has to go through a network of nodes.
The network automatically checks any changes of transaction or information every ten
minutes. Since the information stored in the blocks are difficult or even near impossible to
tamper. The dissemination of data can be efficient in terms of money resources, human
resources and time management. This decentralized technology is expected to revolutionize
how we perceive and handle information may it be personal, financial or asset-related data. The
application of this technology can drive the changes that we lack in any transaction we undergo
because it helps build trust through establishing traceability, transparency, security, speed and
cost efficiency. Such industry that can potentially benefit from this technology would be the
financial sector. Blockchain can be applied to digital asset platforms, commodity trades, and
even land registries. But one ailing system, the near-irrelevant taxation can take advantage and
give relief to the affect party.
The current taxation system fits the cash exchange, but many are questioning where the system
is still effective following the era of digital transaction. With many things being done in the
internet, new business models and faces of economy showing up. The importance of staying
up-to-date is a priority.
Tax Challenges
The tax system can be tricky and is always at risk with fraud and error. The very reason why
some can still go away with evasion. Blockchain technology can offer solution to the problem
with its ability to be transparent and detect errors in real-time. Helpful to record if tax such as
VAT, sales or income taxes are correct and paid upon. The how, where, when and what tax can
now be dependable as fraudulent activity can be prevented. Honest reporting of correct
information with complex decisions from taxpayers, and accounting departments will be
impacted. Freeing up time to individuals and save resources for accountants.
Tax Cost
Blockchain usage in taxation can help lower the cost of collecting and processing tax. According
to a document released by IRS (Internal Revenue Service) in the United States, the institution
spend about $291 million on updating 140 computers systems in the midst of coping up with
new tax law. Around 90% of the upgrade cost was spent on information technology related
expenses and back-office functions. Applying blockchain in the process will eliminate great need
for back-office operations and costly IT expenditures.
Tax Security
The utilization of blockchain in this kind of platform can help with the demanded speed, security
and cost of operation that can ensure better purpose. A private blockchain can deliver security
since taxpayers can be protected against identity theft through cryptography.
Tax Agreements
One application benefit of blockchain is smart contracts. It is a program that enforce agreement
made in contractual clauses. It can help any tax institution to manage settlements and various
degree of agreements between individuals, and corporations.
Tax Speed
The stress of being real time is an issue in taxation to the point that late or buzzer beater
settlement become a norm. For example, paying tax through a check can take up to seven days
to settle. Processing large amount of independent data needs time leading to some important
reports published in a later date. An implementation of blockchain will result to faster processing
and implications that may arise from late tax consultation can be prevented.
Overall, Blockchain is a complex beautiful technology. See it as how you define internet, we do
not really understand how it works but at the same time we use it and are actually comfortable
with it. Some industry expert projects that this technology will take over and get full adoption at
around six years. Do not see it as a new system within our existing enterprises but an
accessible platform of open-source powered by nodes. Its full potential will be wielded by early
adopters who have seen the flaws of our current ways.
