A critical analysis of the implications of the fourth industrial revolution on tax regulation: relevance of the robot tax debate in South Africa from a developing country perspective

Master Thesis


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The world is experiencing a paradigm shift exhibited by the unprecedented convergence of the biological, physical, and technological environments. This paradigm shift, occasioned by the Fourth Industrial Revolution (4IR), is transforming the way of life, work, business, the law, and government policy across the world. The introduction of 4IR technologies such as robotization and Artificial Intelligence is threatening massive labour displacements and resultant significant erosion of the tax base. With the full extent of the 4IR yet to obtain scholars, international organisations such as the Organisation for Economic Cooperation and Development (OECD), World Economic Forum (WEF) and governments have initiated policy inquiries and debates to respond to the looming threats and to maximise on opportunities presented by the 4IR. This research falls within the broader context and out of similar concerns to the OECD Base Erosion and Profit Shifting project (BEPs) and as expressed under Action 1 which deals with the taxation of the digital economy. Amongst the proposals to respond to robotization threats to the tax base is the imposition of a robot tax. Therefore, the robot tax debate is the foci of this research. So far, the robot tax debate has been restricted to developed countries and now slowly gaining momentum in developing countries. The South African president, Cyril Ramaphosa constituted the Commission on the Fourth Industrial Revolution in 2019 in response to the dawning realities of the 4IR. The commission is tasked with the mammoth task of deciphering the 4IR and diagnosing its impact across various sectors in South Africa and to report its findings and recommendations. The establishment of the commission on 4IR underscores the imperativeness of this study whose crux is to explore the relevance of the robot tax debate in the South African context representative of developing countries. This is in cognisance of the struggle against inequality, rising unemployment, a broadening budget deficit, stagnant economic growth, and declining revenue collections against a growing demand for free education and social security. Using a doctrinal approach, this research finds that the robot tax debate is not only relevant but imperative in developing countries and that the socioeconomic circumstances present in these countries aggravate the negative impact of 4IR.