How Zero-Knowledge Blockchain can help Europe tax GAFA?

[Cordillerabit]

The challenge is huge. For the last ten years, dozens of billions of euros went under the radar, evading taxation in the European Union. One might recall, for instance, that Google was recently held to owe 13 billion euros to Ireland for “undue privilege” by the EU. We are also rendered speechless upon learning that Airbnb paid less than € 93,000 of taxes in France in 2016 for an estimated 120 million euros in profits, equating to less than € 775 of taxes for every million made.

During the Tallin Digital Summit, European leaders failed to reach an agreement to harmonize GAFA’s tax rates. Some European States (i.e. Luxembourg, Ireland…) did not support the French initiative led by Bruno Le Maire (the French Minister of Economy) to tax companies’ yearly earnings, country by country. It remains, nonetheless, both a political debate and a technological issue.

As a matter of fact, even if the concept is appealing on paper, its actual execution is much more uncertain. Practically, it means creating a common base of taxation at a European level – which is a challenge. To begin with, months of debates will be necessary to arrive at – in the best-case scenario – a political consensus. European States will be hesitant to lose their fiscal sovereignty. This is followed by the inherent difficulties in applying this solution: just considering the issues raised by harmonizing the data streams or synchronizing fiscal calendars. After which comes the consideration for security requirements. How is it possible then to imagine that such a solution, revealing GAFA’s yearly earnings country by country, including all attached fiscal information, won’t arouse some hackers’ appetite, or even cause a Fiscaleak?

In short, tremendous tenacity and ingenuity will be required for this idea to become concrete. And even at a break-neck pace, many years will be required for it to be operational. Let’s be clear: it is more time than would be necessary to allow GAFA, champions of fiscal optimization, to adapt their strategy.

Choosing this path is choosing a dead end. Facing GAFA we’ll have, at worst, a European taxation “Maginot”: after having put forth a tremendous amount of effort to build it, it will be useless when it is at last ready.

What if you discovered that it is now possible to use a faster and less expensive solution, just as reliable and completely decentralized? Furthermore, this solution complies with all expectations with no requirement that any European State reveal or share its fiscal data? And finally, it doesn’t require any party to challenge its sovereignty?

That is exactly the function of a particular form of Blockchain called “Zero-Knowledge Blockchain”. The Zero-Knowledge Blockchain combines Blockchain’s greatest strength – decentralized sharing of information – to the Zero-Knowledge Proof properties for protecting confidential data.

In concrete terms, this technology will allow aggregation at a European level of the rate for a global taxation of international firms without unveiling fiscal information, as well as maintaining the confidentiality of every country. No need to tax results: it is now possible to evaluate the global taxability of GAFA at a European level and act accordingly. By introducing an aggregated fiscal indicator at a European level, technology can properly contribute to the democratic debate about taxation.

A technologic fantasy? Certainly not! Distributed management of certificates and of reputation, operational risk management of a partner, deep visibility on the efficiency of a supply chain: this type of solution is already set up in ecosystems willing to share information in real time without revealing any data, as major European and American banks, leading industrial players, are currently testing this technology and making it practicable.

Rest-assured: it is possible to beat GAFA at their own game, through fiscal and technological flexibility. If we should choose to do so, it is now within easy reach.

Jonathan Rouach & Ruben Arnold Co-founders of QED-it

ABOUT QED-IT

Founded by a world class team, QED-it has developed the Zero-Knowledge Blockchain. Combining two advanced technologies, zero-knowledge proof cryptography and enterprise blockchain, ZK Blockchain solves the coordination between actors in the same industry, eliminating the necessity of sharing their confidential data. In practice, Zero-Knowledge Blockchain provides proof for all parties, without disclosing their underlying confidential data.

https://themerkle.com/how-zero-knowledge-blockchain-can-help-europe-tax-gafa/