In accordance with the Imperial Constitution of 1871, the German Empire of the late nineteenth and early twentieth centuries was a federal state. The governments of the center (the Reich) and the federal states pursued a fiscal policy that had some features of “proto-competitive” federalism. Over the subsequent fifty years, however, German federalism evolved toward fiscal federalism. This transition was finally consolidated during 1919 and 1920 due to some endogenous factors and even more to exogenous ones. The article is based on statistical material as well as research from various studies, including those available from the library of the Goethe-Institut. The article compares the extent to which there were indications of proto-competitive federalism in the German budgetary system prior to Matthias Erzberger’s (finance minister of the German Empire) financial reforms (1919–1920) and indications of fiscal federalism after them. The transformation in both the distribution of power and responsibility as well as in provision of resources by various levels of the budgetary system to support those changes during the transition from proto-competitive to fiscal federalism is analyzed. The attempt to strike a balance between the fiscal interests of the center, federal states, and municipalities is explored; and equalization is singled out as a new function of the empire’s budget process. The creation of a so-called self-sufficient economy in the empire just before the First World War and its subsequent survival under pressure from sanctions and international isolation demanded a flexible balance between centralization and decentralization of spending powers along with an appropriate allocation of resources. Fiscal federalism through centralization of funds allowed Germany to begin recovery from geopolitical and socio-economic challenges, while maintaining decentralization primarily in non-tax revenues encouraged local governments to continue developing their economies. The logic derived from this historical study of the changing models of German fiscal federalism is also applicable to Russia: the reduction of revenues and growth of expenditures in the Russian Federation’s federal budget in recent years makes centralization of fiscal resources at the federal level more important, and the growth of expenditures in the regions and municipalities necessitates transfers and equalization measures.
Understanding how central and local governments share resources and responsibilities is crucial for analyzing political and economic systems.Decentralization is not a one-size-fits-all solution for enhancing local government efficiency and responsiveness.While it was once believed to lead to better governance and civic engagement, fiscal challenges (such as vertical fiscal imbalances, soft budget constraints, and the flypaper effect) can undermine fiscal discipline and efficiency, potentially causing fiscal crises at the subnational level.This thesis examines fiscal decentralization and public finance in Brazil through three empirical essays.First, I explore the financial impacts of extreme weather events on local public finances in Brazil.The findings show that droughts do not significantly influence intergovernmental transfers, causing financial strain, while floods result in increased government grants.However, this financial boost does not lead to better spending on flood mitigation, indicating a moral hazard associated with reliance on higher-level government resources.Second, I investigate the impact of territorial divisions on local governments.The analysis, using voter turnout and financial data, shows that administrative divisions initially boost electoral engagement, though this effect fades over time.Territorial fragmentation also increases reliance on vertical transfers while raising expenditures without significantly affecting fiscal balance.Third, I evaluate the Program for the Modernization of Tax Administration (PMAT), which was designed to enhance local tax collection.This analysis shows that the program had no significant impact on tax collection, highlighting the ineffectiveness of modernization efforts aimed at reducing municipal reliance on intergovernmental transfers.
The emerging markets are fast gaining relevance in the revolution of digital finance. With the continued growth of cryptocurrency and decentralized finance (DeFi) technologies, governments in these jurisdictions are confronted by a reality crisis, namely, how they can implement tax regimes that are both revenue-generating and innovation-friendly without toxicizing the regulatory landscape. In the paper, the complex issues of taxation of crypto assets and DeFi activity in emerging economies are discussed, structural, technological, and institutional barriers to the conventional tax framework are presented and complicate the taxation of cryptocurrency and related activities. A mixed methods strategy (applying qualitative stakeholder information to quantitative modelling and comparative policy research) helps to reveal how current tax regimes, in most cases, fall behind market development, which results in loss of revenue, enforcement gaps as well as non-intended incentives to informal economic responses. We suggest that effective policy frameworks should strike the right balance between revenue collection and fairness, enforceability and respect of decentralized spirit of DeFi. We identify practical solutions, including adaptive regulatory sandboxes, blockchain-based reporting solutions, and collaborative international standards that can all help build a resilient but adaptable tax regime by reviewing country case studies and the best practices of other countries. The results of our findings indicate that the emerging markets can use technology and cross sector partnership to make their tax systems engines of compliance and innovation. Finally, the study offers a roadmap to policymakers in an attempt to have fair, efficient, and progressive cryptocurrency taxation of crypto assets and decentralized finance.
Enuma Ezeife, Eseoghene Kokogho, Princess Eloho Odio, Mary Oyenike Adeyanju
The rapid evolution of tax regulations in the United States, coupled with increasing digital transformation in financial compliance, necessitates the development of agile, scalable, and efficient tax technology solutions. Traditional tax management systems, often rigid and monolithic, struggle to adapt to dynamic regulatory changes, increasing enterprise demand for flexible, technology-driven approaches. This review explores Agile Tax Technology Development as a conceptual framework that integrates agile methodologies with advanced digital solutions to enhance efficiency, scalability, and compliance in enterprise tax management. Agile methodologies, such as Scrum, Kanban, and SAFe, provide iterative and adaptive software development models that allow tax technology teams to rapidly respond to regulatory updates and evolving business needs. The review examines key components of agile tax technology, including cloud-based infrastructure, API-driven architectures, automation, and artificial intelligence, which collectively enable real-time tax processing, predictive analytics, and seamless integration with financial systems. Additionally, it discusses the role of cross-functional collaboration among tax professionals, software developers, and regulatory experts to ensure compliance and continuous improvement. Scalability is a critical factor in enterprise tax solutions, requiring cloud computing, microservices architecture, and distributed ledger technologies to efficiently process vast amounts of tax data. This study highlights best practices in Agile Tax Technology Development by analyzing case studies from leading enterprises and government initiatives. Furthermore, it addresses challenges such as integrating agile frameworks into legacy tax systems, ensuring cybersecurity in financial data processing, and overcoming organizational resistance to agile adoption. Ultimately, this review provides a forward-looking perspective on the future of tax technology in the U.S., emphasizing the need for continuous innovation, automation, and agility in response to an increasingly complex regulatory landscape. The findings serve as a guideline for enterprises seeking to modernize their tax compliance strategies while maintaining operational efficiency and regulatory adherence. Keywords: Agile Tax Technology, U.S, Efficient Enterprise Conceptual Framework.
Abstract The integration of Artificial Intelligence (AI) and decentralized economies is redefining wealth distribution by enabling autonomous financial systems, AI-powered smart contracts, and decentralized governance models. AI enhances decentralized finance (DeFi) by optimizing liquidity management, predictive analytics, and risk assessment, making financial services more accessible and inclusive. Through AI-driven tokenized economies, self-sovereign identities (SSIs), and automated economic decision-making, individuals—especially unbanked populations—can participate in global wealth creation without traditional financial barriers. AI-powered Decentralized Autonomous Organizations (DAOs) are further revolutionizing financial governance by ensuring transparent, algorithmic decision-making and equitable wealth allocation. However, challenges such as AI bias, cybersecurity risks, regulatory uncertainties, and scalability limitations must be addressed to build sustainable AI-driven decentralized financial ecosystems. This chapter explores the intersection of AI, blockchain, and decentralized finance, offering insights into how AI is transforming digital trade, financial inclusion, and economic autonomy while shaping a more equitable, decentralized global economy. Keywords AI-driven economies, decentralized finance, DeFi, AI-powered smart contracts, wealth distribution, DAOs, blockchain governance, tokenized economies, financial inclusion, AI in economic decision-making, self-sovereign identities, decentralized marketplaces, economic autonomy, AI-driven wealth redistribution, predictive analytics in finance, AI in decentralized governance.
Abstract Decentralized finance (DeFi) is gaining momentum in the world of banking, finance, and beyond. Yet, there remains a notable lack of scholarly research addressing the foundational principles and concepts underlying DeFi. In response to this gap, this study undertakes an extensive investigation into DeFi, drawing upon existing academic literature and insights from industry experts to develop a taxonomy of DeFi's attributes, operational models, and associated risks. This classification sharpens the definition of DeFi and yields critical insights for scholars and industry professionals keen on advancing DeFi's technological applications. By pinpointing essential characteristics of DeFi, mapping out its diverse business models, and highlighting the risks for DeFi users, this research contributes to the academic dialogue. It lays down a comprehensive framework for understanding DeFi, paving the way for subsequent studies and practical implementations in this dynamic area.
The increasing prominence of crypto asset transactions has brought their tax implications into focus. This thesis explores whether returns from Decentralized Finance (DeFi) transactions, particularly staking activities, can be classified as interest for tax purposes under South African law and international tax treaties, specifically the 2017 OECD Model Tax Convention on Income and Capital (OECD Model). A comprehensive legal analysis, supported by an exemplar, is used to determine how these innovative financial transactions align with existing legal frameworks both domestically and internationally. South Africa, consistent with other jurisdictions, does not classify crypto assets as fiat currency or legal tender. Current guidance suggests that income derived from crypto asset transactions is subject to general tax rules, potentially taxed as ordinary income or capital gains. This paper assesses whether the returns from staking crypto assets resemble interest and could trigger the application of South Africa's withholding tax on interest (WTI). Section 24J of the Income Tax Act provides a non-exhaustive list of items considered as interest in relation to financial and lending arrangements, with the underlying principal in common law being that interest is compensation for the advancement of credit. Interestingly, across the definition under section 24J and the common law definition, the mutual understanding is that interest is not confined to arise from money or currency and can take various forms in substance. Under the OECD Model, interest is similarly defined as income from debt claims, with no explicit reference to money or currency. By contrast, the UK acknowledges similarities between DeFi returns and traditional interest but maintains that interest can only arise from money or currency, thus excluding DeFi returns from being considered as interest. This thesis examines whether staking returns from DeFi can be classified as interest under Article 11 of the OECD Model and whether tax treaties can reduce or eliminate South Africa's WTI on such returns. It concludes that staking returns could potentially be taxed as interest under South African law but underlines the need for clearer regulatory guidance at both national and international levels to address the growing complexities posed by DeFi.
The rapid expansion of cryptocurrency markets has fundamentally challenged the architecture of traditional tax systems.As digital asset transactions increasingly bypass institutional oversight, national and international tax frameworks remain fragmented, reactive, and insufficient.This paper critically examines the structural, technological, and policy-driven barriers that inhibit global tax systems from effectively regulating cryptocurrency conversions, particularly the transformation of digital assets into fiat currencies.Drawing upon a comparative analysis of tax regimes across the United States, European Union, United Arab Emirates, and Singapore, this study identifies systemic inconsistencies in the classification of crypto assets, the recognition of taxable events, and the enforcement of cross-border reporting standards.The research highlights the growing prevalence of decentralized finance (DeFi) platforms, peer-to-peer exchanges, and privacy-enhancing technologies, which further complicate tax compliance and erode the ability of authorities to trace digital wealth.Using an interdisciplinary framework grounded in regulatory arbitrage theory and institutional economics, the paper explores the interplay between policy inertia, technological complexity, and jurisdictional competition.It critically assesses the limitations of emerging efforts such as the OECD's Crypto-Asset Reporting Framework (CARF) and FATF's Travel Rule, arguing that without coordinated global standards, crypto tax evasion will persist through legal voids and regulatory arbitrage.The study concludes with a set of policy imperatives for achieving equitable, technologically feasible, and internationally harmonized approaches to digital asset taxation-ensuring tax integrity without stifling innovation or violating digital privacy rights.
p class="MsoNormal"The cryptocurrencies that are an integrated part of blockchains have led to creating enormous value and wealth that attract increasing attention from investors and governments. The sophistication and anonymity of crypto assets create significant challenges for tax administrations as the current tax rules and guidelines in relation to them are either too broad or too complicated. This article proposes a simplified tax regime that would significantly reduce compliance and administration costs when taxing cryptocurrency for which the first taxable event occurs at the moment when crypto assets are converted to fiat currency or other real-world goods or serviceso:p/o:p
Non-fungible tokens (NFTs) have gained significant prominence in the crypto-asset market in recent years, with their use expanding across a wide range of economic sectors, which in turn raises numerous new tax challenges. This chapter analyzes the main controversial issues that NFTs raise in the area of indirect taxation and the challenges faced by lawmakers and tax authorities.
Eva Kicová, Juraj Fabuš, Natália Stalmašeková, Terézia Kvasnicová-Galovičová
Taxing Bitcoin and other cryptocurrencies presents a significant challenge due to their decentralised and pseudonymous nature, complicating enforcement and fostering regulatory inconsistencies across jurisdictions. This study systematically reviews the existing literature on cryptocurrency taxation, critically analysing 38 academic studies to identify key themes, challenges, and gaps in global regulatory frameworks. Using a structured seven-step methodology, it examines how jurisdictions approach cryptocurrency taxation, highlighting ten thematic categories, including jurisdictional comparisons, taxable events, and compliance mechanisms. The findings reveal persistent regulatory fragmentation and a lack of harmonisation, underscoring the need for international cooperation to establish coherent tax policies. By synthesising existing research and identifying unresolved issues, this study contributes to the discourse on balancing technological innovation with fiscal accountability, ultimately advocating for a unified, cross-border approach to cryptocurrency taxation.
Over the last couple of years, an increasing number of organizations have arisen that are native to blockchain technology. Recent data shows that these decentralized autonomous organizations (DAOs) that are essentially ‘living on the blockchain’ are becoming increasingly popular. They are attracting substantial amounts of funds, operating both in the Web3 space and off-chain, and creating a significant source of novel tax issues. The existing tax academic research on DAOs is often limited to US domestic tax issues following from the DAO’s legal treatment. This article outlines (part of) the existing income tax landscape for the DAOs and some of the arising income tax challenges. The focus is on the general principles of domestic and international income tax systems. The authors argue that the DAOs create fundamental and practical tax issues potentially leading to income taxed ‘nowhere’. Existing tax frameworks cannot fully embed the DAOs and allow them to maintain their distinguishing features. The incorporation of DAOs does not necessarily solve the tax issues and even exacerbates them in certain cases. The authors call upon domestic and international legislators and policymakers to aim for more tax certainty for shareholders and further tax research of the DAOs.
This study examined the association between corporate cryptocurrency activities and tax avoidance outcomes, utilizing data from US public firms covering the period from 2015 to 2023. Financial data were sourced from Compustat, while details regarding cryptocurrency activities were manually extracted from 10-K and 10-Q filings. Our analysis employed a fixed-effects regression model to examine the impact of these activities on cash effective tax rates (ETR). The findings indicate that firms engaged in cryptocurrency activities tend to have a lower ETR compared with those without such involvement. Notably, this effect was predominantly observed in companies directly engaged in cryptocurrency activities, such as accepting cryptocurrency as a payment method or actively trading cryptocurrency on an exchange platform. In contrast, firms involved in crypto mining or initial coin offerings did not exhibit a similar association. Our findings offer significant regulatory insights for governance bodies concerned with the implications of corporate cryptocurrency activities on tax strategies.
This study aims to determine the effect of fiscal decentralization financing sources on poverty levels. This study covers areas in Jambi Province using secondary time series data for the period 2007-2016. This study uses Multiple Regression Analysis. Fiscal decentralization financing sources of local revenue and balancing funds do not have a significant positive effect on poverty levels in Jambi Province, while other legitimate incomes have a positive and significant effect in Jambi Province from 2007-2016. The effect of fiscal decentralization financing sources (PAD, DP, PL) on poverty levels in Jambi Province is 80.2%, while the remaining 19.8% is influenced by other factors not included in this study. And there is a strong relationship between fiscal decentralization and poverty levels of 89.6%.
Decentralized finance (DeFi) is one of the most promising technologies currently developing on blockchain infrastructure.It offers an innovative approach to providing financial services, allowing transactions to be conducted without the involvement of traditional financial intermediaries, such as banks or payment systems.This is achieved through the use of decentralized protocols and smart contracts that automatically execute the terms of agreements.Such decentralization can have a significant impact on international trade, creating new opportunities for businesses and reducing the costs of international operations.The main advantages of using DeFi in international trade include reducing transaction costs, speeding up payment processing, and ensuring transparency in transactions.By eliminating the need for intermediaries, businesses can conduct payments directly with each other, which significantly shortens transaction processing time and minimizes commission fees.This is particularly important in the context of the global economy, where the speed and efficiency of financial transactions are critical to the success of companies in international markets.Moreover, decentralized finance can promote financial inclusion by providing access to financial services in regions with weak banking infrastructure.For small and medium-sized enterprises in developing countries, DeFi opens up opportunities to enter global markets without the need to rely on traditional banking institutions, which are often inaccessible or too expensive for these businesses.In such cases, DeFi becomes an important tool for stimulating economic growth and promoting international trade in these regions.However, despite the significant advantages of DeFi, several challenges limit its widespread adoption in international trade.The main ones include legal
Should the government run an uncertain fiscal policy to finance its liabilities? We call the resulting uncertainty taxspots, and study conditions that make taxspots optimal and recurrent in standard Ramsey problems. We show that prudence and market incompleteness play a role in sustaining taxspots, and that equal-treatment randomizations can be decentralized via taxspots even in the absence of financial markets.
Mohammed Ibrahim Gariba, Samuel Amponsah Odei, Frank Febiri, Romana Provazníková
The motivation of this research is the surge in the integration of the digital economy (DE) and fiscal decentralization (FD) as crucial issues for countries. To maintain sustainable growth, it is important for EU to adopt sustainable development goal (SDGs) practices. However, the connection between DE, FD, and SDG practices has not been thoroughly examined in existing literature. Therefore, the objective of this study was to examine the mediating role of DE between FD and SDGs in EU. We employed a panel dataset between 2016 and 2022 from Eurostat, the Organization for Economic Cooperation and Development, and Government Finance Statistics, using a quantitative research design, and applied the structural equation model (PLS-SEM) analysis to test the hypotheses. The results indicate that FD has a significant negative effect on economic sustainability but a significant positive effect on environmental and social SDGs. In addition, FD has a significant positive effect on DE. We also found that DE has a significant positive relationship with economic and social SDGs. However, DE has a negative but significant influence on environmental sustainability. This study also proved that DE plays a mediating role between FD and Sustainability. This study contributes to theories of fiscal federalism and resource dependency. These original findings have several practical implications for policymakers and contribute to the current debate on the role of FD in SDGs through DE. hence, we recommend that policymakers prioritize the development of broadband Internet access, e-governance resources, and invest in digital skill training programs.
Abstract The verdict in the case of Skatteverket v. David Hedqvist (Kokott, Advocate General (2015) Opinion delivered on 16 July 2015, Case C-264/14. ECLI:EU:C:2015:498. Available via TandF Online. https://doi.org/10.1080/20488432.2015.1096631 .) is crucial for understanding how the EU treats virtual currencies, such as Bitcoin, in terms of Value-added Tax (VAT). This case involved the Swedish citizen David Hedqist who was seeking clarity from the Swedish Tax Authority Skatteverket on exchanging money for Bitcoins. The case set a precedent exempting such services from VAT under the EU’s VAT Directive (Council Directive 2006/112/EC (2006) On the common system of value added tax. OJ L347. Available via EUR-Lex. https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32006L0112 . Accessed 3 January 2024.). Specifically, Article 135(1)(e) of the EU’s VAT Directive excludes those transactions from VAT that include money-related transactions, that include deals or negotiations about different kinds of money, including cash and coins that are officially legal tender, i.e., used for buying things, except for collectable items like special coins or notes that people collect but do not use as a means of payment. Skatteverket (Kokott, Advocate General (2015) Opinion delivered on 16 July 2015, Case C-264/14. ECLI:EU:C:2015:498. Available via TandF Online. https://doi.org/10.1080/20488432.2015.1096631 .) clarified that cash transactions are not subject to VAT, even though they are considered services for VAT purposes. Despite this clarity, the evolving landscape of digital assets’ uniqueness, including Non-Fungible Tokens (Alawadhi KM, Alshamali N (2022) NFTs Emergence in Financial Markets and their Correlation with DeFis and Cryptocurrencies. Applied Economics and Finance 9:108. https://doi.org/10.11114/aef.v9i1.5444 . Available at CORE. https://core.ac.uk/download/pdf/524752899.pdf . Accessed 3 January 2024.), continues to challenge VAT frameworks across member states. Using insights from the European Commission’s Working Paper 1060, this article advocates for a unified approach tailored to digital and crypto services, addressing complexities in NFT taxation to reduce uncertainty and foster market cohesion. The findings highlight the importance of legislative changes and increased cross-border collaboration, as well as provide recommendations for policymakers and stakeholders in the digital finance and platform sector (European Commission (2024) Working Paper 1060. Available at: https://ec.europa.eu/info/publications/working-paper-1060_en . Accessed 3 March 2024.). By proposing strategic harmonisation of VAT enforcement, the research helps to improve tax compliance and support long-term growth in the EU’s digital market (Cappai M (2023) The role of private and public regulation in the case study of crypto-assets: The Italian move towards participatory regulation. Computer Law & Security Review 49:105831. Available at: https://www.sciencedirect.com/journal/computer-law-and-security-review/vol/49/suppl/C .; Hasa J (2021) Digitaalisten palvelujen rajat ylittävä kuluttajakauppa ja laajeneva arvonlisäveron erityisjärjestelmä. Licentiate thesis. University of Lapland, Faculty of Law. Available at: https://lauda.ulapland.fi/bitstream/handle/10024/64771/Hasa_Juho.pdf?sequence=1 . Accessed 1 March 2024.).