The impact of digitalisation on tax revenue in the fourth industrial revolution : a systematised review

Abstract

Background: Digitalisation has evolved around the world, as such resulting in the use of computer-generated systems as opposed to making use of human capital. The fourth industrial revolution has introduced the use of artificial intelligence, robotics, and machine learning. It is established that, where the computerised systems, such as robots replace human workers, the government may lose large amounts of income as personal income tax is a high revenue contributor for governments. As a result of the many technological advancements being explored, it is crucial that the tax systems are updated to accommodate the changes which may be experienced in the market. Main purpose of study: The main purpose of this study is to understand and explore the impact digitalisation has on tax revenue where the digitalised revolution is being explored. In this regard, the current study systematically analyses existing published literature relating to the impact of digitalisation on tax revenue in the fourth industrial revolution. Method: The current study is based on the interpretation and analysis of existing literature gathered from credible academic journals. The research method followed in this study is a qualitative research method which follows a systematic review. Results: After analysing the publications, it is noted that digitalisation and tax is a complex issue with the majority of the authors concluding that the fourth industrial revolution has resulted in automation having a huge influence not only on the unemployment rate but also on the economy of countries. Conclusions: The study indicates that technological advancements may result in high unemployment as human workers are replaced by computer-generated systems. As individuals are the main revenue contributors for the government, tax authorities might have to explore the introduction of a tax on the technological advancements to make up for the loss to the fiscus.