Can Blockchain Revolutionize Tax Administration?

53 Pages Posted: 11 May 2021 Last revised: 24 May 2021

See all articles by Orly Mazur

Orly Mazur

Southern Methodist University - Dedman School of Law

Date Written: May 7, 2021

Abstract

Experts predict that the use of smart contracts and other applications of blockchain technology can potentially revolutionize the manner in which we do business. Blockchain promises trust, transparency, improved access to shared information and records, as well as operational efficiency and cost savings. Thus, it is no surprise that companies and entrepreneurs are now developing blockchain solutions for an array of markets, ranging from real estate to health care. But, can this new technology revolutionize tax administration? Our current tax administration system suffers from a large tax gap, high compliance and administrative costs, and many inefficiencies. Blockchain’s core attributes may present a solution to these shortcomings.

This Article considers the underexplored role of blockchain in the tax space and concludes that blockchain has tremendous potential to revolutionize tax administration. In particular, implementing a blockchain-based platform for tax administration would present significant opportunities to digitalize and automate certain tax processes, minimize government information constraints, increase the transparency and trustworthiness of tax-related data, and reduce costs, data redundancies, and other inefficiencies involved in the tax administration process. However, many challenges and limitations must first be overcome to achieve these revolutionary goals. Thus, this Article also sets forth several normative steps for policymakers to undertake in supporting the development of blockchain and helping it to realize its full potential in the tax space. Taking an active role in exploring and understanding blockchain’s benefits, limitations and implications will place the government in the best position to harness the advantages of blockchain and modernize our system of tax administration.

Keywords: blockchain, tax, tax policy, technology, tax administration, tax gap, tax compliance

JEL Classification: K34, O30

Suggested Citation

Mazur, Orly, Can Blockchain Revolutionize Tax Administration? (May 7, 2021). SMU Dedman School of Law Legal Studies Research Paper No. 510, Available at SSRN: https://ssrn.com/abstract=3841785 or http://dx.doi.org/10.2139/ssrn.3841785

Orly Mazur (Contact Author)

Southern Methodist University - Dedman School of Law ( email )

P.O. Box 750116
Dallas, TX 75275
United States

HOME PAGE: https://www.smu.edu/Law/Faculty/Profiles/Mazur-Orly

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