Whereas the digital economy is mostly composed of digital companies and the web-based commercial marketplace, the brick-and-mortar businesses are also covered since most now take payment through digital payment systems.
What this means is that digital payment systems now permeate nearly every sector, blurring the line between the traditional and digital economy.
The internet marketplace and the digital economy are data-driven and therefore I anticipate the next stage of the government’s tech-driven tax compliance enforcement campaign to be deployment of big data analytics and artificial intelligence in building taxpayer profiles using third-party payments and financial services information to flag transactions that would otherwise have escaped the tax net.
Sectors such as E-commerce, Gaming, Financial Services (fintech), and Telecoms process hundreds of thousands and for some, even millions of daily transactions.
Unlike a few years ago when tax authorities had no means of scrutinising such an
overwhelming volume of transactions and to assess tax upon each and every one including the tiniest of transactions.
Currently, Tax Authorities are able to rely on advanced data analytics and the deployment of artificial intelligence tools to track tax on even the smallest of transactions.