WE have blogged on technological trends before and how the EU VAT Directive is framed to take advantage. These technological trends have already revamped our lives and are about to become much more important (or, indeed, instrusive, depending on your outlook).
The EU has gone to great lengths to ensure that technological trends are catered for in their 2015 VAT Directive. Photo: Getty Images
Well, the EU Expert Group on the Taxation of the Digital Economy gives us some fascinating insight into what the European Commission is keeping a close eye on. They don’t see these trends as a threat. They want to ensure that EU legislation covers these new inventions, thus ensuring a return for the exchequer in each EU Member State.
So, what technological trends are we talking about?
Many of us have migrated to using the Cloud to store our content. Local storage has fallen out of favour as we host our files and images in the Cloud. This trend is unlikely to change in the near future. Indeed, the Expert Group cite MGI estimates that “the total potential economic impact for Cloud technology could be $1.7 to $6.2 trillion in 2025, with $1.2 to $5.5 trillion in the form of surplus from use of cloud-enabled Internet services and $500 to $700 billion from productivity improvements for enterprise IT.” The preparation is well under way Forbes.com quoted Frank Gens, of IDC, predict that global spend on cloud computing in 2014 would exceed $100 billion.
Data is the king, everyone wants to have and use data. Facebook, Google and Amazon have become behemoths as they know more about their users/consumers than anyone else. Data is big money. The Expert Group states that Big Data Technology is “expected to grow from $6 billion in 2011 to $23.8 billion in 2016.” This figure is akin to a compound annual growth rate of 31.7 per cent, or seven times that of the information and communications technology market.
The Internet of Things
Everyday devices like your fridge, washing machine, home alarms and thermometer combine for the Internet of Things. They will interact with you and with one another, controlling room temperature or letting you know when to get milk. The numer of devices connected to the internet is expected to explode in the coming years. The Expert Group references MGI statistics which put the potential impact of the Internet of Things at between $2.7 trillion and $6.2 trillion annually by 2025. The CEO of Cisco John Chambers has gone a step further estimating the Internet of Things market to eventually top $19 trillion.
The substitution of human labour, yes it’s continuing to grow. But how beneficial will it be? The Expert Group believe this technology could “generate an economic impact of $1.7 trillion to $4.5 trillion per year by 2025, about half of which from health-care uses.” There has also been this invention: the mind-controlled robotic arm. Imagine what this technology can do for amputees?
Google is leading the field here with their driverless cars”). The Expert Group claim that the introduction of self-driving autonomous vehicles could have a total economic impact of $200 billion to $1.9 trillion per year by 2025 from improved safety, time savings, productivity increases (people could work while the car automatically ) and lower fuel consumption and emissions.
Watch any YouTube video and you will be amazed by 3D Printing, it’s a jaw-dropping experience. But how far can this technology reach. There are claims that it could enable bio-printing of 3D living organs. The Expert Group say that “3D printing has the potential for disruptive impact on how products are designed, built, distributed and sold.” MGI estimates that 3D Printing could generate an economic impact of $230 billion to $550 billion per year by 2025, with consumer use being the key market driver.
Consumer habits changing
Technology is changing our lives and our consumer habits will change accordingly. The challenge for governments and tax authorities around the globe is to ensure that they receive their slice of the action. There has been an attempt to future-proof the recent 2015 VAT Directive so as to take advantage of technological trends. This is purely because the European Commission realises the current, and potential, value of these technological trends. They want to ensure that EU Member States benefit from the surge in popularity, and consumer usability, of this new technologies.
Here’s the EU Expert Group’s own roadmap.
Note: Taxamo content is created for guidance only, please consult your local tax advisor for professional advice.