Blockchain and the future of tax

Reimagining tax in today’s interconnected world.

David Jarczyk

David Jarczyk

Principal, Tax, KPMG (US)

+1 312-665-8907

What is blockchain?

Blockchain, or distributed ledger technology (DLT), is an emerging digital technology that represents a foundational shift in record keeping. Blockchain is a way of ordering and verifying transactions in a distributed ledger, where a peer-to-peer network of computers maintains and validates a record of consensus of transactions with a cryptographic audit trail.

Tax professionals may need to embrace the advent of blockchain and the potential uses of distributed ledger technology beyond cryptocurrency. From developing tax strategies to claiming potentially available R&D credits, discover how blockchain is helping to reimagine the tax function.

 

Industries that may be affected by blockchain include:

  • Financial services
  • Insurance
  • IOT
  • Real estate
  • Manufacturing
  • Transportation
  • Energy
  • Automobile
  • Supply chain
  • IT
  • Education
  • Media
  • Retail
  • Dining
  • Cosmetics
  • Apparel
  • Health
  • Gaming

R&D credit for blockchain

Blockchain development activities may include:

  • Platform development - Developing blockchain platforms and/or applications that provide a new feature or functionality, or improve existing functionality, performance, reliability, or quality.
  • Smart contracts - Developing smart contracts (a computerized transaction protocol that executes the terms of a contract) to perform automation of digital contracts to facilitate, verify, or enforce the negotiation or performance of a  contract.
  • Scalable and efficient application - Designing and implementing blockchain applications that can manage/ process individual processing nodes in a public blockchain or organizations in a sectorwide blockchain.
  • Network -  Developing the algorithms  to manage user privacy  and consensus in private/public blockchain networks.
  • Big data projects/data warehouse and analytics - Enabling the collection, efficient processing, and analysis of large volumes of data as it's distributed and secured through blockchain technology.
  • Regulation and governance - Building blockchain applications that comply with the new and evolving regulations.
  • Security and privacy - Enhancing the applications security built on blockchain via numerous techniques to ensure data's privacy protection and security.

Are you claiming potentially available R&D credits?
U.S. research and development (R&D) tax credits are incentives of up to 15.8 percent for eligible incremental development spending, resulting in potentially millions of dollars in tax savings. Companies engaging in R&D efforts in blockchain may be able to qualify for this credit.

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