Chapter 10 - Tax and Robots

Summary

INTRODUCTION

• 1. It is unthinkable to imagine a world without computers and the Internet. Pretty soon, it will be unimaginable to live in a world without robots and AI. Increased automation is currently becoming part of our lives and is not only limited to the industry sector. It has also penetrated the services sector and soon it will become prominent in our everyday lives. As it appears from different chapters in this book, increased automation presents many opportunities to different elements of our society but also many challenges. This is not different in the framework of taxation.

• 2. In the current state of play, a specific tax on robots does not exist in Belgium. Rather, the profits of corporations generated by robots are subject to tax according to the general corporate income tax (CIT) rules. In this respect, most states treat robots owned by corporations as assets similar to machines or computers which form part of the process of the production of goods or the performance of services. However, there are some governments that have issued proposals or implemented legislation aiming at taxing automation because it is perceived as presenting a threat to the labour market. For example, South Korea has reduced tax incentives for corporations using robots3 and New York City mayor Bill de Blasio has proposed a specific tax on large corporations that use robots to the detriment of labour forces. In this regard, it should be observed that, even in the few cases in which a tax on automation has been proposed/implemented, there is not yet a comprehensive and generally agreed system of taxation of robots amongst countries. In Belgium, the profits derived by robots are taxed together with the other profits of a corporation according to the general CIT rules. However, certain tax incentives apply for companies investing in robots/AI.

• 3. Although robots are as such not yet being taxed, governments have recognised that the use of robots/AI (and the digitalisation of the economy in general) has changed business models in such a way that corporations can scale up without mass and as such do no longer need the presence of premises or personnel in a particular country in order to conduct their business there.