According to the official data from the European Commission, the EU lost approximately 137.5 billion Euros only in 2019 due to Value Added Tax (VAT) gap. The analytics believe there are many reasons for this – one of the most popular being the differences in tax compliance between the member states.
To put it simply, some states control their taxpayers much more, leading to a drastically lower percentage of tax evasion. However, could this be the sole reason why the EU lost 11.2% of the total VAT revenue last year? And is the European Union the only one facing this problem?
Can Technology Help?
Many believe that current tax collection laws aren’t suitable for the 21st century anymore, deeming them completely outdated. The problem mostly hides behind the fact that governments and their authorities are simply not present enough; which allows for intentional misinterpretation of tax laws.
However, governments are starting to step in by using technology as one of the main assistants to help them in the process of modernization. Moreover, they are changing their stance as to why some taxpayers avoid their legal obligations – could it be that the whole process is tiresome and overcomplicated for an average Joe?
By using technology, tax authorities are able to establish a more transparent system, where avoiding paying taxes becomes very difficult. Additionally, this very technology can help taxpayers comply with local laws much easier, and it opens a window of opportunities on how to make the whole process faster. Most importantly, tax authorities worldwide can now digitalize the list of their taxpayers which they can further share with any jurisdiction necessary.
Some Countries Are Already Adapting
A handful of countries have already seen the potential in digitalizing their tax and fiscal systems. It was companies like Data Tech International (DTI) that helped these countries digitalize and easily track every single fiscal receipt via a certain system as a result. In the case of DTI, we developed a platform called TaxCore to allow tax authorities track any possible illegal activities or tax evasion performed by taxpayers.
Overall, it is important that the government implementing a new system addresses the problem, comes up with a definite solution, and informs the population about it. It should also come up with very good arguments as to why the new digital system is good and works both ways. After all, society needs to benefit from these changes as much as the government.
The Future of Technology in Taxation
It is only a matter of time before all the countries start taking advantage of everything technology can do for them. The fiscal systems most of the governments still uphold to are out of touch with modern times.
Unfortunately, most jurisdictions believe that the whole process of abandoning an old but functional system for a new one is long and wearisome. This is the main reason why a system that was supposed to be abandoned 20 years ago is still in use.
Fortunately, DTI is already proving to many that this transit from old to new isn’t complicated nor lengthy; instead, it can be very fast, efficient, and beneficial.