A Review of Blockchain Technology Integration in Tax Policy

Introduction

In their 2021 article titled “Blockchain Technology integration in tax Policy: Navigating challenges and unlocking opportunities for improving the taxation of Ghana’s digital economy”, Anomah et al. (2024) conducted a series of interviews to uncover perspectives on implementing blockchain technology into the system of taxation in Ghana. The authors are primarily focused on the taxation of online businesses in the country. More specifically, the authors aim to answer the following research question: “To what extent does the integration of blockchain technology into tax policy enhance the effectiveness of taxing online enterprises in Ghana?” (Anomah et al., 2024, Introduction).

A Review of Blockchain Technology Integration in Tax Policy

In their article, Anomah et al. (2024) identify the problem that online business activity in Ghana may be contributing to the country’s tax gap. More specifically, online business activity poses challenges related to digital identity, cross-border transactions, tax evasion, non-compliance, and data accuracy (Anomah et al., 2024). One potential solution to this problem, the authors suggest, is blockchain technology for reasons such as transparency, immutability, tax traceability, digital identity verification, real-time reporting, etc. (Anomah et al., 2024).

The study tested five hypotheses related to the factors that influenced the integration of blockchain technology: “H1: Institutional pressure influences the integration of blockchain technology in online business tax policy”, “H2: Institutional conformity influences the integration of blockchain technology in online business tax policy”, “H3: Legitimacy influences the integration of blockchain technology in online business tax policy”, “H4: Technological interoperability influences the integration of blockchain technology in online business tax policy”, and “H5: Stakeholder engagement influences the integration of blockchain technology in online business tax policy” (Anomah et al., 2024, p. 6).

Amonh et al. (2024) implemented a mixed-method survey to test these hypotheses. The survey respondents comprised 136 online business operators, tax experts, consumers, blockchain consultants, accounting experts, and finance experts. The education level of respondents ranged from diplomas to PhDs, and their experience level ranged from under one year to over five years (Amonh et al., 2024).

An analysis of the responses seemed to confirm all five of the researchers’ hypotheses. Among et al. (2024) tested the dependent variable “Integration of Blockchain in Tax policy” (Amonh et al., 2024, Fig. 1) against each of the five independent variables separately and found statistically significant relationships for each of the tests. This suggests that institutional pressure, institutional conformity, integration legitimacy, technological interoperability, and stakeholder engagement do play a role in whether blockchain will be integrated into tax policy in Ghana.

Other scholars, such as Mazur (2021), have supported the idea that the adoption of blockchain technology for taxation has obstacles that “extend beyond mere technological limitations” (Mazur, 2021, p. 120). Mazur (2021) puts forth a framework for policymakers to consider, which would serve as the foundation for the ultimate adoption of blockchain technology into taxation systems.

Additionally, these conclusions are supported by more fundamental theories such as “Institutional Isomorphism,” which is the observation that institutions tend to become increasingly similar (DiMaggio & Powell, 1983), or “Policy Diffusion,” which is “a process where policy choices are interdependent” (Braun & Gilardi, 2006, Abstract).

References

Anomah, S., Ayeboafo, B., Aduamoah, M., & Agyabeng, O. (2024). Blockchain Technology integration in tax Policy: Navigating challenges and unlocking opportunities for improving the taxation of Ghana’s digital economy. Scientific African, 24, e02210. https://doi.org/10.1016/j.sciaf.2024.e02210

Mazur, O. (2021). Can blockchain revolutionize tax administration? Social Science Research Network. https://doi.org/10.2139/ssrn.3841785

DiMaggio, P. J., & Powell, W. W. (1983). The Iron Cage revisited: institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147. https://doi.org/10.2307/2095101

Braun, D., & Gilardi, F. (2006). Taking ‘Galton’s problem’ seriously. Journal of Theoretical Politics, 18(3), 298–322. https://doi.org/10.1177/0951629806064351