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Digital Economy Rising: The Revenue Agency Opportunity

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As the digital economy expands, revenue agencies need to improve their approach to facilitate ease of digital income declaration.

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Digital Economy Rising: The Revenue Agency Opportunity

  1. 1. DIGITAL ECONOMY RISING: THE REVENUE AGENCY OPPORTUNITY Findings from the Accenture 2017 Taxpayer Survey
  2. 2. Copyright © 2018 Accenture. All rights reserved. 2 Digital platforms make it easy and compelling to earn money via the internet. What revenue agencies once considered marginal activity is rapidly becoming far more significant. Providing professional services So what should revenue agencies be doing NOW to capture, manage and control this new source of income? Participating in the gig economy Selling products and services online Findings from our 2017 Accenture Taxpayer Survey forecast impressive growth in taxpayers’ digital economy earnings from:
  3. 3. DIGITAL ECONOMY GROWTH REVENUE AGENCY CONSIDERATIONS SERVICE DESIGN WHAT TO DO NOWDIGITAL ECONOMY GROWTH
  4. 4. DIGITAL ECONOMY PARTICIPATION IS EXPANSIVE Copyright © 2018 Accenture. All rights reserved. While only 6% of all taxpayers* report they earned income from the digital economy in 2017: Source: Accenture Taxpayer Survey 2017 Sample: All respondents (n=6512) 4 Uber already has 2M citizen drivers eBay global volume $84+B Airbnb 3+M listings in 191 countries Facebook Marketplace 36 countries and 3X search volume growth in past year *Higher in: New Zealand (9%), UK (8%), Norway (7%), Singapore (7%) 4
  5. 5. Copyright © 2018 Accenture. All rights reserved. 5 30%reported it was their primary income source for 2017 Of those earning income from the digital economy
  6. 6. How do you generate income from the digital economy?* SOURCES OF INCOME SPAN PRODUCTS AND SERVICES 6 In the flourishing digital economy, citizens are earning income by sharing, renting or selling a variety of products and resources Source: Accenture Taxpayer Survey 2017 Sample: All respondents who earn from digital economy (n=387) I sell products on sites like Amazon, eBay and other ecommerce platforms I provide professional services via various social media platforms and aggregator services I collect and/or lend money on crowdlending or crowdfunding platforms like Kickstarter or Zopa 49% I drive a cab on platforms like Uber Others * Multiple response question 30% I rent out a room/ house on room sharing sites like Airbnb 16% 14% 13% 19% Copyright © 2018 Accenture. All rights reserved.
  7. 7. How do you expect your income from the digital economy to evolve within the next 5 years? INCOME FROM DIGITAL IS PROJECTED TO GROW QUICKLY Copyright © 2018 Accenture. All rights reserved. 7 Source: Accenture Taxpayer Survey 2017 Sample: All respondents (n=6512) of taxpayers report that within FIVE YEARS they will start to earn income or earn more income from the digital economy than they do today of taxpayers ages 25-32 years old would say much higher 41% I will earn much more from the digital economy than today I will earn slightly more from the digital economy than today I will earn as much income from the digital economy as today I will start to earn income from the digital economy I will not earn any income from the digital economy OVERALL 25-32 YEARS 53%
  8. 8. DIGITAL EARNERS STRUGGLE WITH TAX COMPLIANCE Copyright © 2018 Accenture. All rights reserved. 8 Source: Accenture Taxpayer Survey 2017 Sample: All respondents who earn from digital economy (n=387) Digital economy users that find it is difficult to understand and fulfill tax obligations regarding digital income earnings 45%
  9. 9. How do you treat income earned from the digital economy when you are filing your tax returns? DIGITAL EARNERS STRUGGLE WITH TAX COMPLIANCE Copyright © 2018 Accenture. All rights reserved. 9 Source: Accenture Taxpayer Survey 2017 Sample: All respondents who earn from digital economy (n=387) of taxpayers are unsure if they are required to declare digital income on their tax returns 17% 45% I declare this income in my returns 17% I am unaware whether I have to declare this income 32% I do not declare this income, as I do not earn enough from it 6% I do not declare this income, as I do not want to pay tax on it
  10. 10. Copyright © 2018 Accenture. All rights reserved. 10 = NO AGENCY ACTION GROWING COMPLIANCE ISSUE
  11. 11. AGENCIES NEED A BETTER APPROACH Copyright © 2018 Accenture. All rights reserved. 11 By acting now, agencies can get ahead of this challenge, create a better approach and prevent future errors from occurring. NOT UNDERSTAND how to apply this income to their tax return NOT KNOW if they have to make quarterly estimated tax payments MAKE ERRORS on tax returns, which are expensive and labor- intensive to resolve Without change, significantly more taxpayers will:
  12. 12. REVENUE AGENCY CONSIDERATIONS REVENUE AGENCY CONSIDERATIONS SERVICE DESIGN WHAT TO DO NOWDIGITAL ECONOMY GROWTH
  13. 13. KEY CONSIDERATIONS: EXAMINE THE ISSUE FROM MULTIPLE PERSPECTIVES Copyright © 2018 Accenture. All rights reserved. 13 Most tax legislation was written before digital business models emerged and does not explicitly consider this income. What is the impact of growing digital models on agency revenue yields? How do we best mitigate associated risk? What level of responsibility should be required of platforms to ensure citizens are operating and reporting sales and income correctly? What can agencies do to help protect citizens from non-compliance?
  14. 14. What role do platforms have in ensuring the revenue generated by their users is tax compliant? CREATE DEEPER PARTNERSHIPS WITH PLATFORM PROVIDERS Copyright © 2018 Accenture. All rights reserved. 14 Ensuring sellers are properly established with the revenue agency? Facilitating the reporting of sales and income? Withholding appropriate taxes on behalf of sellers?
  15. 15. How can agencies and platforms work together to create solutions that: CREATE DEEPER PARTNERSHIPS WITH PLATFORM PROVIDERS Copyright © 2018 Accenture. All rights reserved. 15 Inform and educate taxpayers about how to appropriately manage their tax situation Involve the taxpayer in the co-creation alongside the platform and agency Work within the platform business model, but may also be platform specific
  16. 16. MAKE IT EASIER FOR CITIZENS TO COMPLY Digital economy taxpayers are typically more digital savvy and accustomed to interacting in a seamless, mobile, digitally native way Copyright © 2018 Accenture. All rights reserved. 16
  17. 17. Copyright © 2018 Accenture. All rights reserved. 17 HOW EASY is it to register on the platform? HOW QUICKLY can the seller find answers to questions? HOW SIMPLE is the purchase transaction? THEIR EXPECTATIONS ARE INFLUENCED BY THEIR PLATFORM EXPERIENCES
  18. 18. Copyright © 2018 Accenture. All rights reserved. 18 BUT HOW? WHAT IS THEIR REVENUE AGENCY EXPERIENCE? Agencies and their platform partners need to take a holistic approach that minimizes the burden on all participants making it easy for citizens to comply.
  19. 19. SERVICE DESIGN REVENUE AGENCY CONSIDERATIONS SERVICE DESIGN WHAT TO DO NOWDIGITAL ECONOMY GROWTH
  20. 20. SERVICE DESIGN INTRODUCE CHANGES THAT WORK FOR ALL Copyright © 2018 Accenture. All rights reserved. 20 Involves all aspects of the service from who will use it to what problems it must solve Puts users at the heart of the design, bringing their voices into the process from the very beginning Takes an inclusive and immersive design approach Is collaborative and iterative, dynamic and adaptive Can create elegant and effective solutions, without huge investments of time or money
  21. 21. 3 2 1 Copyright © 2018 Accenture. All rights reserved. 21 THREE PRINCIPLES OF SERVICE DESIGN User Centric Putting the user at the heart of everything you do fosters an empathetic understanding of the problems to be solved and will create services that delight users and gain adoption Co-creation Exploring and designing concepts together will produce solutions that are business viable as well as technically feasible Holistic Building interdependent, interrelated experiences that connect emotionally with people help propel services that scale beyond the original idea. Agencies can implement complete solutions driving greater value to the agency faster.
  22. 22. Copyright © 2018 Accenture. All rights reserved. 22 ENSURE THEY DO NOT BURDEN platforms or agency with too much overhead Make it easy for agencies to MONITOR AND SUPPORT Offer users simple, straightforward INTERACTIONS NEW APPROACHES SHOULD CONSIDER NEEDS OF ALL PARTIES
  23. 23. WHAT TO DO NOW REVENUE AGENCY CONSIDERATIONS SERVICE DESIGN WHAT TO DO NOWDIGITAL ECONOMY GROWTH
  24. 24. Use Service Design to construct new and engaging ways to reduce taxpayer errors and foster voluntary compliance as the digital economy grows REVENUE AGENCIES THE RISK IS REAL AND GROWING Copyright © 2018 Accenture. All rights reserved. 24 Work with platforms and users to gain understanding using quantitative and qualitative research Identify the opportunities to create value through the art-of-the-possible Design solutions together that solve the problems and shape experiments to learn from users Expand, strengthen, and enrich solutions that create value INFORM Discover with insight FORMULATE Describe with impact FREEFORM Co-create with agility TRANSFORM Scale with excellence
  25. 25. Copyright © 2018 Accenture. All rights reserved. 25 Participation in the Digital Economy is expected to GROW SIGNIFICANTLY SUMMARY THE REVENUE AGENCY OPPORTUNITY Agencies need to act now to: CURB THE CONFUSION that exists today or face a growing compliance issue LEVERAGE A SERVICE DESIGN APPROACH aligned to drive the right outcomes PARTNER WITH PLATFORMS to create solutions that work for all: the agency, the platform and the taxpayer
  26. 26. CONTACTUS DAVID REGAN Global Managing Director Accenture Revenue MICHAEL KELLY Digital Lead Accenture Revenue ABOUTACCENTURE Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 435,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. 26 Copyright © 2018 Accenture. All rights reserved.
  27. 27. ABOUTTHE ACCENTURETAXPAYERSURVEY2017 The survey covered topics pertaining to the taxpayers experiences, attitudes, and their expectations from their respective federal tax authorities. Citizens in 12 countries, who had interacted with their tax authority in the previous 12 months were eligible to participate: Australia, Denmark, France, Ireland, Japan, Netherlands, New Zealand, Norway, Singapore, Spain, UK and US. The study included 6,512 taxpayers aged 18+ evenly split between male and female across a range of ages. It was conducted online by our partner Market Knowledge Online (MKO), in the month of March 2017, and has a confidence level of 95%. This is third edition of the global Accenture Taxpayer Survey. Copyright © 2018 Accenture. All rights reserved. 27
  28. 28. FIND OUT MOREaccenture.com/revenue

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