Ernst & Young Global Limited (EY) has collaborated with the UK government to design an extensive blockchain project to help with problems related to the cross-border withholding tax process.
The complications of foreign withholding tax arise when a paper-based conventional process of data saving is lost or the shared data is not genuine due to privacy concerns. The multinational professional services network company, also known as EY, announced on Wednesday that it had targeted the complexities of the international withholding tax process in its attempt to better the taxation process in the European Union.
Hank Prybylski, who serves as the global vice chair of Transformation at EY says that the Blockchain is a remedy for the tax challenges faced by people currently. According to him, this mission promises a smooth system with industries being able to accommodate legal and technical glitches, providing the taxpayers a technology that addresses their demands and encourages digital transformation.
The WHT solution, called TaxGrid, uses EY’s blockchain-based technology to assist the mechanization of decentralized financial data between the two stakeholders of tax authorities and intermediaries. The network retains the privacy of data between financial institutions and government agencies. To assure the taxpayers of its secure system, the project executes a zero-knowledge proof technology. This is a digital concord that enables the transfer of information between the two agencies using personal details.
The collaboration on the WHT solution included quite a few international tax officials, starting with the UK’s tax collection agency HM Revenue & Customs, the Netherlands Tax Administration, and some officials from Norway. There were also significant contributions from companies like French Banking Group, JPMorgan, Citibank, and Northern Trust.
To test the abilities of the system, EY officials with expertise in their respective fields have, along with industry authorities, laid down various evaluation processes to ensure its smooth functioning. The TaxGrid system tokenizes investment entitlements with smart contracts, using them on financial agencies’ owned blockchain wallets.
EY, with its impressive vision of supporting Blockchain and crypto-related issues, launched a crypto tax app CryptoPrep that could produce an output of the user’s gain/loss calculation, enabling efficient tax filings in America. EY has empowered the distributed ledger technology, making it an ingenious remedy to the many requests by the taxpayers and authorities. With the current solution, it is possible to envision European Commission’s plan to commence establishing a collaborative, mainstream EU-wide system for withholding tax relief at source.