Blockchain for Taxes Project
EFAMA intends to launch a pilot test and discover how the use of distributed ledger technology (DLT) can be used to provide a Withholding Tax Relief at Source model and, making use of current market infrastructure and deliver trust and transparency for all market participants including tax authorities. The project’s main goal is to streamline the investment process by providing secure information, thus reducing inefficiencies and risks for all market participants and tax authorities (including fraud and excess WHT). We want to enhance the ideal ‘relief at source’ procedures. Any unknown or unconfirmed holdings which eligibility cannot be verified or validated via the DLT chain will be automatically blocked to be recovered by reclaim.
EFAMA members are happy to contribute to this pilot, and stand ready to contribute to an impact assessment and to help the Commission move forward with its action plan. The immediate aim is to identify and map current local requirements - recycle the existing legislation/regulatory requirements – and build an EU wide multilateral entitlement matrix (allowing smart contracts to be co-signed by both investors and tax authorities). Governments will benefit from receiving a single, common format disclosure per filing, providing fully traceable, pre-confirmed evidence of entitlement. This process will eliminate the requirement for paper-based certification of residence forms for withholding tax, receipts of physical reclaims and cost of the administration of repaying reclaim amounts.