Reinventing revenue agencies in an ecosystem world

The five key trends in the Accenture Technology Vision 2021 (Stack Strategically; The Mirrored World; I, Technologist; From Me to We; Anywhere, Everywhere) all point to technology becoming ever more central for all organisations. In my previous blog, I explored the implications of the Stack Strategically trend for revenue agencies and the system architectures they’ll need to develop to merge business and technology strategies.  

In this blog, I’ll look at the ‘Me to We’ trend – the growth of multiparty systems. So, what are they? Multiparty systems enable a shared data infrastructure between individuals and organisations. This in turn drives efficiencies and creates new business and revenue models across many industries. In the revenue agency context, this is all about building ecosystems with other government agencies, third parties, businesses and personal taxpayers to make paying tax more efficient.  

Revenue agency leaders agree the time has come for multiparty systems. In research for Accenture’s Technology Vision 2021, we found that 77% agree or strongly agree that implementations of multiparty systems in the revenue industry are rapidly shifting from ambitious undertakings to necessary solutions. There are three facets of this trend that are relevant for revenue agencies service that could potentially help.

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Fortifying the tax system  

The OECD’s Tax Administration 3.0 report stresses the potential for tax to happen as close to real time as possible, with real-time data at the fore. And that requires a significant fortification of the ecosystem between businesses and revenue agencies. We are already seeing this trend in plenty of revenue agencies today, for example with real-time information from payroll, such as invoices and receipts. Being successful in these endeavors requires building new and closer connections with key ecosystem partners in these domains. 

Agencies now receive much more data at a higher velocity and in greater detail than before. The result? They have the potential to analyse and assess it in real time, spot anomalies and request changes directly and almost instantly. However, taking advantage of such potential requires a deeper examination of compliance processes and approaches – creating “compliance by design."

Extending into new areas 

Businesses based on digital platforms offer an opportunity to redefine tax agency engagement given their natural attributes of being digital, real-time, and connected. Thinking about engagement from a “compliance by design” perspective offers opportunities for taxation to become a natural part of the transaction process. Tax can potentially be deducted and paid in real time for an online purchase from Amazon or on income received from a room rented out via platforms like Airbnb.  

And that, in a sense, starts to redesign the tax system itself. Because of the very nature of the digital economy and the platforms central to it, the traditional returns-based approach will move to a transaction-based methodology. It seems inevitable this will extend over time to embrace more and more businesses. But while for a lot of the larger platforms this is technically a relatively straightforward development, making it happen will require a unique way of thinking for agencies as the tax world extends into new environments. 

Reinventing for the new economy 

Now to reinvention. A key area for this is in the payments domain. How do revenue agencies engage much more closely with banks and other organisations that provide payment services and infrastructure for smaller businesses? Companies like Stripe, a payments infrastructure service, could potentially help both the tax agency ensure that the right tax is collected at the right time, but also help small businesses on the platform manage their own tax risks more effectively.  

The arrival of central bank digital currencies further enhances the opportunity to reinvent tax systems. The programmability potential with such currencies could be applied to developments such as automating social and green taxes, particularly in applying rebates or tax credits to these circumstances. These developments are probably a little way off, but revenue agencies can be thinking about them now in order to prepare for a much more digital, interconnected, and real-time future tax world.  

How is your agency building stronger ecosystems to meet current and future tax demands? If you’re interested in discussing this trend further, please connect with me on LinkedIn.