Digital Economy Rising: The Revenue Agency Opportunity

DIGITAL
ECONOMY
RISING:
THE REVENUE AGENCY
OPPORTUNITY
Findings from the Accenture 2017
Taxpayer Survey

Copyright © 2018 Accenture. All rights reserved. 2
Digital platforms make it easy and compelling to earn
money via the internet.
What revenue agencies once considered marginal activity
is rapidly becoming far more significant.
Providing
professional services
So what should revenue agencies be doing NOW to capture,
manage and control this new source of income?
Participating in
the gig economy
Selling products
and services online
Findings from our 2017 Accenture Taxpayer Survey forecast
impressive growth in taxpayers’ digital economy earnings from:

DIGITAL
ECONOMY
GROWTH
REVENUE AGENCY
CONSIDERATIONS SERVICE DESIGN WHAT TO DO NOWDIGITAL ECONOMY GROWTH

DIGITAL ECONOMY
PARTICIPATION IS EXPANSIVE
Copyright © 2018 Accenture. All rights reserved.
While only 6% of all taxpayers* report they earned income from the digital
economy in 2017:
Source: Accenture Taxpayer Survey 2017 Sample: All respondents (n=6512)
4
Uber already has
2M citizen drivers
eBay global
volume $84+B
Airbnb 3+M
listings in 191
countries
Facebook
Marketplace 36
countries and 3X
search volume growth
in past year
*Higher in: New Zealand (9%), UK (8%), Norway (7%), Singapore (7%)
4

30%reported it was their primary income source for 2017
Of those earning income from the digital economy

How do you generate income from the digital economy?*
SOURCES OF INCOME SPAN
PRODUCTS AND SERVICES
6
In the flourishing digital economy, citizens are earning income by sharing,
renting or selling a variety of products and resources
Source: Accenture Taxpayer Survey 2017 Sample: All respondents who earn from digital economy (n=387)
I sell products on sites like
Amazon, eBay and other
ecommerce platforms
I provide professional services
via various social media
platforms and aggregator
services
I collect and/or lend
money on crowdlending
or crowdfunding platforms
like Kickstarter or Zopa
49%
I drive a cab on
platforms like Uber
Others
* Multiple response question
30%
I rent out a room/
house on room
sharing sites like
Airbnb
16%
14% 13% 19%

How do you expect your income from the digital
economy to evolve within the next 5 years?
INCOME FROM DIGITAL IS PROJECTED
TO GROW QUICKLY
Source: Accenture Taxpayer Survey 2017 Sample: All respondents (n=6512)
of taxpayers report that within FIVE
YEARS they will start to earn income
or earn more income from the digital
economy than they do today
of taxpayers ages 25-32 years
old would say much higher
41%
I will earn much more from the
digital economy than today
I will earn slightly more from
the digital economy than today
I will earn as much income from
the digital economy as today
I will start to earn income from
the digital economy
I will not earn any income from
the digital economy
OVERALL 25-32 YEARS
53%

DIGITAL EARNERS
STRUGGLE WITH TAX COMPLIANCE
Digital economy users
that find it is difficult to
understand and fulfill tax
obligations regarding
digital income earnings
45%

How do you treat income earned from the digital
economy when you are filing your tax returns?
DIGITAL EARNERS
STRUGGLE WITH TAX COMPLIANCE
of taxpayers are unsure
if they are required to
declare digital income
on their tax returns
17%
45% I declare this
income in my returns
17% I am unaware whether
I have to declare this
income
32% I do not declare this income,
as I do not earn enough from it
6% I do not declare this income,
as I do not want to pay tax on it

=
NO AGENCY ACTION
GROWING COMPLIANCE ISSUE

AGENCIES NEED
A BETTER APPROACH
By acting now, agencies can get ahead of this challenge, create a better
approach and prevent future errors from occurring.
NOT UNDERSTAND
how to apply this income to
their tax return
NOT KNOW
if they have to make
quarterly estimated
tax payments
MAKE ERRORS
on tax returns, which
are expensive and labor-
intensive to resolve
Without change, significantly more taxpayers will:

REVENUE AGENCY
CONSIDERATIONS
REVENUE AGENCY

KEY CONSIDERATIONS:
EXAMINE THE ISSUE FROM
MULTIPLE PERSPECTIVES
Most tax legislation was written before digital business models
emerged and does not explicitly consider this income.
What is the
impact
of growing digital
models on agency
revenue yields?
How do we best
mitigate
associated risk?
What level of
responsibility
should be required of
platforms to ensure
citizens are operating
and reporting sales
and income
correctly?
What can agencies
do to help
protect
citizens from
non-compliance?

What role do platforms have in ensuring the revenue generated by
their users is tax compliant?
CREATE DEEPER PARTNERSHIPS
WITH PLATFORM PROVIDERS
Ensuring sellers are
properly established
with the revenue
agency?
Facilitating the
reporting of sales
and income?
Withholding
appropriate taxes
on behalf of sellers?

How can agencies and platforms work together to create solutions that:
CREATE DEEPER PARTNERSHIPS
WITH PLATFORM PROVIDERS
Inform and educate
taxpayers about how to
appropriately manage
their tax situation
Involve the taxpayer
in the co-creation
alongside the
platform and agency
Work within the
platform business
model, but may also be
platform specific

MAKE IT EASIER
FOR CITIZENS
TO COMPLY
Digital economy taxpayers
are typically more digital savvy and accustomed to
interacting in a seamless, mobile, digitally native way

HOW EASY
is it to register on the platform?
HOW QUICKLY
can the seller find answers to questions?
HOW SIMPLE
is the purchase transaction?
THEIR EXPECTATIONS ARE
INFLUENCED BY THEIR
PLATFORM EXPERIENCES

BUT HOW?
WHAT IS THEIR REVENUE AGENCY EXPERIENCE?
Agencies and their platform partners need to take
a holistic approach that minimizes the burden on
all participants making it easy for citizens to comply.

SERVICE DESIGN
REVENUE AGENCY

SERVICE DESIGN
INTRODUCE CHANGES THAT WORK FOR ALL
Involves all aspects
of the service from
who will use it to
what problems it
must solve
Puts users at the
heart of the
design, bringing
their voices into
the process from
the very beginning
Takes an inclusive
and immersive
design approach
Is collaborative
and iterative,
dynamic and
adaptive
Can create elegant
and effective
solutions, without
huge investments
of time or money

3
2
1
THREE PRINCIPLES
OF SERVICE DESIGN
User Centric
Putting the user at the heart of everything
you do fosters an empathetic
understanding of the problems to be solved
and will create services that delight users
and gain adoption
Co-creation
Exploring and designing concepts together
will produce solutions that are business
viable as well as technically feasible
Holistic
Building interdependent, interrelated
experiences that connect emotionally with
people help propel services that scale beyond
the original idea. Agencies can implement
complete solutions driving greater value to the
agency faster.

ENSURE THEY DO NOT BURDEN
platforms or agency with too much overhead
Make it easy for agencies to
MONITOR AND SUPPORT
Offer users simple, straightforward
INTERACTIONS
NEW APPROACHES SHOULD
CONSIDER NEEDS OF ALL PARTIES

WHAT TO DO NOW
REVENUE AGENCY

Use Service Design to construct new and engaging ways to reduce taxpayer
errors and foster voluntary compliance as the digital economy grows
REVENUE AGENCIES
THE RISK IS REAL AND GROWING
Work with platforms and
users to gain understanding
using quantitative and
qualitative research
Identify the opportunities
to create value through
the art-of-the-possible
Design solutions together
that solve the problems
and shape experiments
to learn from users
Expand, strengthen, and
enrich solutions that
create value
INFORM
Discover with
insight
FORMULATE
Describe with
impact
FREEFORM
Co-create with
agility
TRANSFORM
Scale with
excellence

Participation in the Digital Economy is expected to GROW SIGNIFICANTLY
SUMMARY
THE REVENUE AGENCY OPPORTUNITY
Agencies need to act now to:
CURB THE CONFUSION
that exists today or face a growing compliance issue
LEVERAGE A SERVICE DESIGN APPROACH
aligned to drive the right outcomes
PARTNER WITH PLATFORMS
to create solutions that work for all: the agency, the platform and the taxpayer

CONTACTUS
DAVID REGAN
Global Managing Director
Accenture Revenue
MICHAEL KELLY
Digital Lead
Accenture Revenue
ABOUTACCENTURE
Accenture is a leading global professional
services company, providing a broad range of
services and solutions in strategy, consulting,
digital, technology and operations. Combining
unmatched experience and specialized skills
across more than 40 industries and all business
functions – underpinned by the world’s largest
delivery network – Accenture works at the
intersection of business and technology to help
clients improve their performance and create
sustainable value for their stakeholders. With
more than 435,000 people serving clients in
more than 120 countries, Accenture drives
innovation to improve the way the world works
and lives. Visit us at www.accenture.com.
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ABOUTTHE
ACCENTURETAXPAYERSURVEY2017
The survey covered topics pertaining to the taxpayers experiences, attitudes, and their
expectations from their respective federal tax authorities.
Citizens in 12 countries, who had interacted with their tax authority in the previous 12
months were eligible to participate: Australia, Denmark, France, Ireland, Japan,
Netherlands, New Zealand, Norway, Singapore, Spain, UK and US.
The study included 6,512 taxpayers aged 18+ evenly split between male and female
across a range of ages. It was conducted online by our partner Market Knowledge
Online (MKO), in the month of March 2017, and has a confidence level of 95%.
This is third edition of the global Accenture Taxpayer Survey.
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Digital Economy Rising: The Revenue Agency Opportunity

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