Abstract
Orientation: Because of the digital economy, taxpayers have access to new income streams. These virtual transactions have taxation consequences, and therefore taxpayers need specialised taxation knowledge to understand their tax obligations and act in a tax compliant manner.Research purpose: The aim of this article was to identify the unique tax knowledge requirements for individuals functioning in the digital economy by systematically reviewing literature on the tax challenges arising from this new economy. Applying a conceptual framework of tax knowledge, these knowledge requirements were categorised as either general, procedural or legal. By identifying these requirements, it was possible to point out the risks within these categories that may cause obstacles to individuals to act fully tax compliant.Motivation for the study: Understanding the different knowledge requirements of taxpayers may assist tax authorities to identify the tax compliance risks of these taxpayers in their capacity as individuals functioning in the digital economy.Research approach/design and method: A qualitative approach was used in the study through a thematic search of appropriate literature such as articles, reports, blogs and media releases. These documents were systematically reviewed to identify the knowledge requirements for individual taxpayers functioning in the digital economy.Main findings: The findings suggest that there are specific tax knowledge requirements in different areas that must be in place to ensure tax compliance in the digital economy. Any shortcomings in these areas of knowledge create the risk of non-compliance for individuals functioning in the digital economy.Practical/managerial implications: Taxpayers and tax authorities alike should take note of the risk areas identified in each area of knowledge (general, procedural and legal) and devise strategies to deal with taxation issues arising from transactions in the digital economy.Contribution/value-add: This study applied a tax knowledge framework and identified the general, procedural and legal tax knowledge requirements of individuals functioning in the digital economy. The study also pointed out associated compliance risks, which may assist tax authorities to target strategies for improving taxpayer knowledge in these three areas.
Highlights
Which one of us can go without looking at our mobile phone, electronic device or computer for 1 day, or even 1 h? With just the press of a button, one is instantly connected to the digital economy
Main findings: The findings suggest that there are specific tax knowledge requirements in different areas that must be in place to ensure tax compliance in the digital economy
The first objective of this study is to identify the tax knowledge requirements of individuals functioning in the digital economy and to categorise these requirements as general, procedural or legal
Summary
Which one of us can go without looking at our mobile phone, electronic device or computer for 1 day, or even 1 h? With just the press of a button, one is instantly connected to the digital economy. The rise of the digital economy in the last 20 years means that ‘digitalisation, that is, the growing use of information and communication technologies (ICT) [is] in every area of life [and] has profoundly shifted society, business and personal lives’ (Vuori, Helander & Okkonen 2019:237). [I]nformation in digital form, facilitated by the digital devices (that) allow the free movement of vast amounts of information in the shortest time possible between people in different parts of the world. It is more about new activities and products than about higher productivity. What is really new in the New Economy is the proliferation of the use of the Internet, a new level and form of connectivity among multiple heterogeneous ideas and actors, giving rise to a vast new range of combinations. There are some measurable effects on productivity and efficiency, but the more important long-run effects are beyond measurement. (p. 245)
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