Bridging the Gap: The Growing Partnership between Tax Authorities and Digital Platforms

Businesses and tax authorities collaborate closely in areas like digital platforms (aggregators, marketplaces) and banking institutions. All work is done remotely, making it hard to track money that passes through the site. A self-employment professional income tax regime can solve this problem. It aims to legalize and tax digital platform workers. This tax regime will target millions of people who have never filed income taxes, according to estimates.

Digital platforms, aggregators, bulletin boards, and others supply self-employed clients with orders and money. Users depend on digital platforms and will cooperate with legalization. Digital platforms are interested in conducting transparent activities in the countries where their customers are based. Thus, tax authorities should only permit legalization operations without excessive complexity and reporting. To find the optimal solution, the tax administration negotiates with the biggest digital platforms to give their legal clients an advantage in promoting their services over other platform users.

Digital cab aggregators can give "legal" drivers preferential order processing, and cheaper commission rates, and enable them to register as self-employed for tax considerations. This is crucial because digital illiteracy and fear of failure prevent self-employed people from registering for taxes. Aggregators can also run information campaigns about the procedure and legal driver benefits. The platform or they can pay taxes. We've seen hundreds of thousands of drivers in one country brought out of the shadows by tax officials and digital taxi and ride-hailing platforms working together. Many digital cab aggregators now deliver food, attracting hundreds of thousands of self-employed couriers.

The first collaborations will inspire other digital platforms in the country. This allows tax authorities to collect taxes in many service sector niches without large efforts in marketing the new tax regime or administration regulations. These alliances work best when digital platforms manage the market rather than chaotic grey market participants. Reasonable tax rates and a suitable tax term (preferably one month) make monthly taxes unnoticeable to taxpayers.

Additionally, platforms that cooperate with tax authorities must be treated equally. They worry that pressuring drivers and couriers will push them to competitors without legalization requirements. Thus, legalization must be cautious to avoid confrontation. Prioritize and resist platform taxation when working with digital platforms. Taxing hundreds of thousands of service and job providers makes the entire money movement transparent, disclosing the platform's genuine commission income. After that, the tax administration should tax digital platforms.

In conclusion, all tax partnership projects and collaborations with potential digital partners require tax administrations to analyze and trust taxpayers to establish a comprehensive digital tax administration strategy. As an illustration, the EU is introducing DAC-7 reporting, through a mandatory disclosure, where a platform owner has to report VAT liability positions of third-party merchants using such a platform.