The sharing economy: turning challenges into compliance opportunities for tax administrations

The rapid growth of the sharing economy has increased pressures on governments to address the variety of economic, social and legal issues it has given rise to in order to redress the emerging distortions without curtailing innovation. A key concern is whether the activities carried out by the agents involved in the sharing economy are adequately captured for tax. The current viewpoint is that the absence of sharing economy-specific regulation exacerbated by the poor visibility of the underlying activities results in under-collection of tax from the service providers and tax breaks for the platforms leading to an unfair competitive advantage over counterparts in the more strictly regulated traditional sectors. This article considers the challenges that the sharing economy poses for tax administrations, how these concerns are acknowledged within national and supranational governments and international organisations, the opportunities it presents for enhanced tax compliance, and measures, taken or proposed, by governments for enhancing tax compliance.