EY anticipates its innovative blockchain-based withholding tax technology to provide a platform for the tax relief system of the European Commission.
EY (Ernst & Young) is aimed at simplifying the blockchain withholding tax process. With a new effort, EY exploring the blockchain technologies potential to simplify taxation processes.
The company announced that the EY project had completed a blockchain project that addresses complexities and shortcomings in the cross-border withholding tax (WHT) process, which is generally a paper process where data can be lost or not shared adequately due to data protection concerns. The EY project has a solid commitment to protecting the rights of individuals.
“It also may not be trusted by counterparties and tax authorities, who require more and more information to validate that the correct amount of withholding tax has been paid either by relief at source or after a withholding reclaim”
The new WHT solution incorporates EY Blockchain Technology to allow for the secure, automated, and decentralized sharing of financial information compliance and fraud reduction between tax agencies and related intermediaries.
The initiative included various global tax authorities, including H.M. Revenue & Customs, the United Kingdom, the Netherlands Tax Administration, the Tax Authority, and Norway’s appropriate authorities. The participating corporation including BNP Paribas, JPMorgan, Northern Trust, and Citibank, a French bank group.
The specialists of the TaxGrid blockchain solution, a multi-party network for blockchain-connected financial intermediaries, were specifically tested by EY experts alongside state and industrial representatives. The method uses smart contracts and distributes them on blockchain wallets belonging to multiple financial institutions. The technology uses tokens to receive investment data and calculate the relevant WHT after identifying final investors.
The system uses zero-knowledge proof technology, a digital protocol that can share data between parties without utilizing passwords, to secure anonymity on the Tax Grid network.
“Distributed ledger technology as a solution to the WHT challenge is no longer merely a concept”
EY’s WHT released distributed ledger reports that the project established a framework for a global solution to respond to different demands of taxpayers and tax authorities.
EY stated:
“This could support the European Commission’s proposal to begin building a common, standardized, EU-wide system for withholding tax relief at source,”
In recent years, EY has aggressively developed blockchain and cryptocurrency-based tax solutions. Last year the company created an EY Crypto Prep, a crypto tax app to give a completely automated tool that supports customers with their U.S. tax filings.
Wallets