What Is the Internet of Taxes? A question answered by Toby Bargar in his article dated May 13, 2021, explains how in this day and age, the Internet generally is gradually spreading wider and wider to cover most daily life. But to this extent, who would have thought so?
So, let us see what it is all about.
What Is the Internet of Taxes?
According to a McKinsey Global Institute report, IoT could have an annual economic impact of $3.9 trillion to $11.1 trillion by 2025. Adoption is accelerating across several settings, including factories, retailers, and even the human body. In fact, smart cities will reportedly create business opportunities worth $2.46 trillion by 2025, and by 2030 more than 70% of global smart city, spending will be from the United States, Western Europe, and China. With AI and the rollout of 5G facilitating faster speeds and scalability, we will see even greater demand across sectors for IoT solutions.
An oft-repeated phrase says that nothing is certain but death and taxes; however, in the case of IoT, we can say that nothing is certain but growth and taxes – we don’t yet know how it’s all going to shake out. The demand for IoT is going to tempt federal, state, and local jurisdictions to tax it. With voice communications taxable revenues declining, taxing IoT is an attractive option to replenish their coffers.
In 1998, Congress passed a moratorium banning state and local governments from taxing internet access. This ban was extended several times. The Permanent Internet Tax Freedom Act (PITFA) converted the moratorium to a permanent ban and was fully implemented nationwide on July 1, 2020. Since the initial moratorium, the internet has risen to be a critical communication tool over other more highly taxed wireless and landline voice options, which continue a steady decline.
The ability to tax IoT may require changing laws and regulations. This process could take some time, but there is a complicated web of laws, regulations, and tax liabilities surrounding IoT in the interim. As we continue to adopt smart solutions, companies have to get smart about the nuances and risks of IoT taxability.
There are two easy questions that will help you to begin to understand your IoT taxability risk.
1) Is your company selling internet access? 2) Is your connectivity embedded or over-the-top?
Over-the-Top or Embedded Connectivity
If your device is networked over a user-supplied connection, then access is over-the-top or bring-your-own Internet connectivity. The over-the-top connection can be wired, Wi-Fi, or purchased separately from a wireless service. For example, if you sell a wireless printer, users connect through their home or office network. You are not supplying the internet, but the device. In these cases, as an IoT device maker, you likely have no responsibility for the customer’s internet connection.
Different than over-the-top, an embedded connection is part of the device. If you sell a device that comes with its own data connection as a component of the sale or service plan, it is embedded. Smartphones are a great example of an embedded connection. The relationships between device makers and network operators can feature widely variable structures. The device provider may need to account for any taxes that need to be collected related to the connection.
The World Wide Web of Gray
Defining internet access may appear intuitive, but not all connectivity is considered internet access. If you are selling a service that meets the statutory definitions of ISP service, the federal law provides a moratorium against state and local taxes.
Private connectivity, however, is often taxable. Unlike the public internet, private connectivity occurs via a Local Area Network (LAN) or Wide Area Network (WAN). This type of access is considered a taxable communication service in most states. If the network is interstate, this will also subject you to the Federal Universal Service Fund fee (FUSF), which is currently 33.4%, an all-time high for this fee and growing higher every quarter.
However, there are questions about whether connections to devices that do not enable a WWW experience – you connect to the internet, but the end-user can’t log onto Facebook or perform a Google search – meet the federal definitions of ISP service. If you do not meet those definitions, then your likely tax destination could be LAN/WAN.
Avoid the Dead Zone
IoT is here to stay. As you develop and deploy IoT solutions, it will be critical to stay informed on the web of tax rules that may or may not apply to your business. Monitor federal and state agencies that have jurisdiction over internet taxation and stay abreast of any changes on the horizon.
With so much uncertainty, it can be tempting to push the envelope, but a conservative interpretation of tax guidance can proactively protect you from being caught off guard.
Finally, to avoid hitting a dead zone, don’t try to navigate the changes on your own. Consult with your tax and legal advisors to ensure that you are aware of the latest developments and plan your course of action accordingly.
SAN FRANCISCO, California — Historically, the indigenous, tribal peoples of the Middle East, called the Bedouins or the Bedawi, have often been excluded or overlooked compared to the settled populations within the Levant region. Although a majority of the Bedouin community reside in the Negev desert, which is located in southern Israel by the border of Egypt, Bedouin individuals also live across the Levant, sometimes traveling into Palestine, Syria, Egypt and Iraq, among other countries. Bedouins come from a diverse range of ancestors, with a portion of the Bedouin community in Palestine originating from Sudan and other African nations.
The Modern Plight of the Desert Dwellers
Unfortunately, poverty and food insecurity are prevalent in Bedouin communities. The families within these groups are largely unable to access government programs and resources to aid them financially due to their nomadic lifestyles. Although research materials on the Bedouin community are difficult to find, some studies have been executed to investigate the population’s economic situation. As part of a study performed in 2008, Suleiman Abu-Bader and Daniel Gottlieb found that less than 9% of Bedouin females were part of the workforce in 2004 and more than three-quarters of the population experienced poverty in unregistered villages.
The nonprofit organization Bedouins Without Borders, created in 2015, aims to create awareness of the Bedouin community and advocate for the rights of Bedouins. As with other indigenous populations, the Bedouin people’s records are difficult to find, and thus, it is more difficult for them to access the resources they need. Therefore, part of the Bedouins Without Borders’ mission is to survey the Bedouin population and analyze the challenges they face in daily life.
Creating Bedouin Records
To aid in better serving the community and keeping track of the resources that families need, Bedouins Without Borders has established the Bedouin Data Bank for collecting basic information and the Bedouin Map to maintain a better understanding of the Bedouin movement over time. In working with mobile communities such as the Bedouin community that are always passing from place to place, it is necessary to log the activity of each tribal group and assess how their current circumstances shape factors such as food security.
The Bedouin youth themselves run these documentation programs, receiving training under the ALFURSAN initiative that Bedouins Without Borders developed to empower and motivate young people in the community. Organizational efforts such as these are crucial in providing the future skills that the Bedouin youth may need for their careers and bridging the cultural gap between the Bedouin community and other communities, making it beneficial on two fronts.
How Bedouins Without Borders Helps
One example of a program that Bedouins Without Borders offers to encourage development is Guardians of the Desert. Like the ALFURSAN program, Guardians of the Desert centers on self-empowerment and community strengthening efforts simultaneously through the youth’s direct engagement. Each of these programs offers valuable leadership positions to Bedouin teenagers and gives young Bedouin individuals the chance to spread awareness about their community and advocate for expanding economic opportunities.
As the Bedawi way of life shifts due to climate change, water shortages and the commercialization of desert areas, community leaders must rise to meet the challenge and tackle the economic issues faced with new methods. In response to increased financial insecurity, young adults in the Bedouin community have opted to become tour guides and implement their knowledge of the environment to educate others and produce revenue in the process.
In this pivot toward sustainable development and practices, ecotourism has become integral to creating a balanced way of life for the Bedouin people. To describe this economic sector succinctly, ecotourism is a method of promoting increased tourism to more remote areas of the world such as the Sahara Desert while also protecting the local ecosystem and informing visitors of how to support conservation efforts. In this manner, Bedouin nomads can produce the income needed for their daily lives without endangering the spaces they inhabit.
Thanks to the Bedouins Without Borders organization, Bedouin leaders and volunteers have designated specific regions as environmentally protected. The goals of establishing a protected area such as the Oasis include preserving land for animals to feed and ensuring that the Bedawi food sources remain abundant and plentiful despite climate change.
The Road Ahead
As a relatively new organization, Bedouins Without Borders has already established a dedicated group of volunteers and launched some promising projects to support its cause. As settlement conflicts continue in Palestine and Israel, Bedouins Without Borders remains diligent in protecting Bedouin interests and ensuring community safety. Currently, Bedouins Without Borders proceeds in its mission to inform people about the community and raise awareness by spotlighting young voices in the Bedouin Monitor section of its website. In 2021, it is hopeful that Bedouins Without Borders will further develop its environmental conservation and poverty reduction efforts for a better tomorrow.
Our thoughts are autocratic and authoritarian regimes here and there plagued by collateral youth bulges and ‘rentier’ organisational systems that bogged down any reach towards a working Democracy in most MENA region countries result in what is described in this article. Historically, these countries opted for Modernity, but the poor institutional quality that ensued leads to heavy bureaucracy here and absent leadership elites there.
The picture above is of the Brookings Institution re-publication of the same article.
Public sector reform in MENA region on the achievable governance revolution
May 4, 2021
Across the Middle East and North Africa, there are countries working to modernise state institutions to make them more efficient, effective and responsive. This column argues that while it is common for Arab governments to look elsewhere for reform ideas, there is a wealth of experience within the region that practitioners should consider. Lessons from public sector reform in MENA from the past two decades suggest that transformative change is possible.
In a nutshell
The revolutionary impulse unleashed by the Arab Spring a decade ago may again sweep through the region once lockdowns are lifted, economies attempt to restart and the full scale of damage to jobs and livelihoods caused by Covid-19 becomes clear.
Even if such pressures do not materialise, governments would be wise to not let the opportunity for disruptive change presented by the pandemic to slip by untapped.
Arab reformers are embarking on the critical task of ensuring that their governments and public sectors can respond to the pronounced development challenges, both known and unknown, that they will be asked to address during the coming decade.
As we approach the tenth anniversary of the Arab Spring, much attention is rightly being given to the broader governance trajectory of the Middle East and North Africa (MENA) region over the last decade.
With the notable exception of Tunisia, the story is hardly encouraging. The aging autocrats are gone, but many of the heady expectations of that time have given way to the consolidation of authoritarian rule by entrenched elites. The luckiest countries have witnessed merely cosmetic changes on key issues of democracy, transparency and rule of law. The less fortunate have witnessed brutal domestic crackdowns and flagrant human rights abuses. And the truly unlucky have descended into chaos and civil war.
Beyond the public debate over democratic change, another long-standing struggle is taking place as many MENA countries work to reform and modernise state institutions to make them more efficient, effective and responsive – an agenda that is less controversial but no less urgent.
The MENA region is home to some of the largest public sectors in the world, yet the quality of service delivery is often poor. The region trails most other parts of the world (with the exception of South Asia and sub-Saharan Africa) on global indices for government effectiveness, quality of regulation and control of corruption. Even more troubling, it is one of the few places in the world that has actually lost ground on these indices over the past decade.
During the Covid-19 pandemic, MENA governments have rediscovered the critical importance of government institutions. Initially, through a combination of luck and skill, regional countries were able to keep their mortality and morbidity rates well below those of hard-hit regions in Europe, North America and Latin America.
The region witnessed many instances of effective policy coordination across traditionally conflicting bureaucratic structures; several countries also built on earlier investments and expertise in e-governance and m-governance to address challenges such as contact tracing and distance learning. Despite pressing financial constraints, governments were quick to adopt unprecedented fiscal and monetary measures to mitigate at least some of the pandemic’s economic impact on the vulnerable segments of society.
Yet the need for broader institutional reforms that go well beyond those adopted in response to the Covid-19 pandemic is immediate and palpable. As the large-scale protests of 2019 demonstrated, ‘the Arab Street’ is becoming less willing to accept the uneven quality of service delivery, or the preferential treatment of large and well-connected firms. Corruption and cronyism are increasingly being recognised and called out for what they are.
The Covid-19 pandemic has underscored the need for flexible, responsive institutions that can adapt to changing circumstances and coordinate complex policies. At the same time, the recent volatility in oil markets and external remittances has made clear that the region must urgently diversify revenue sources and make government expenditures more efficient.
The public sector challenges confronting the region over the next decade are both clear and massive. To cope with the demographic pressures that are already underway, governments will need simultaneously to expand the scope and quality of services that they provide to their citizens, paying particular attention to lagging regions and under-served communities.
They will need to educate the next generation to compete in a changing global economy. They will need to serve as an attractive destination for capital, providing the business environment that will facilitate foreign and domestic investment. They will need to extend their under-funded healthcare systems to serve neglected regions and populations better. And they will need to be agile enough to respond to a host of cross-cutting threats – from climate change and water scarcity, to global energy market transitions – that will require an integrated, nuanced and sustained response across the whole of government.
Of all the challenges that MENA governments must confront, perhaps the most politically fraught is the reality that their traditional social contract, which trades political acquiescence for public sector jobs, is ultimately a Faustian bargain. The problem with the existing social contract is not merely its lack of fiscal sustainability – although that threat is real and will only get worse with time.
The problem is that this bargain undermines meritocracy and hinders the creation of the sort of high-performing public sectors that will be necessary to address the region’s most pressing economic and social problems. It also creates perverse incentives that undermine other critical objectives, such as labour force diversification.
Our assessment provides hope for the region’s future by illustrating that transformative change is possible. And change will be needed. The revolutionary impulse unleashed by the Arab Spring a decade ago and its more recent echoes in 2019 may again sweep through the region once the lockdowns are lifted, economies attempt to restart and the full scale of damage to jobs and livelihoods caused by Covid-19 becomes clear. And even if such pressures do not materialise, governments would be wise to not let the opportunity for disruptive change presented by the pandemic to slip by untapped.
While it is common for Arab governments to look elsewhere for reform ideas, we believe that there is a wealth of experience within the region that practitioners should consider. It may not align perfectly with global knowledge and practice, but neither is it wholly distinct. To the extent that MENA countries differ, it is only in certain areas, and often more by degree than in kind.
The lessons from this experience, both good and bad, will be of great value to the next generation of Arab reformers as they embark on the critical task of ensuring that their governments and public sectors can respond to the pronounced development challenges, both known and unknown, that they will be asked to address during the coming decade.
Abu Dhabi Media to air EAD’s new documentary: ‘Our Sea… Our Future’ now that all fossil fuels divestment appears to generalise for reasons known to everyone overwhelmingly. Rediscovering the sea and historical pearl-diving could well be a segment of diversification of the economy. It must be noted that Abu Dhabi-based Future Rehabilitation Centre is not also that far from the sea shore. Anybody sees anything wrong ?
Abu Dhabi Media to air EAD’s new documentary: ‘Our Sea… Our Future’
ABU DHABI, (WAM) — The Environment Agency – Abu Dhabi (EAD) has unveiled its new documentary: “Our Sea .. Our Future,” as a part of its ongoing cooperation with Abu Dhabi Media.
The 35-minute documentary highlights the fisheries sector, which is an integral part of Abu Dhabi’s heritage. The film illuminates the pressure that Abu Dhabi’s fisheries face, and the actions were taken by EAD to contain the impacts of overfishing on the marine environment, to ensure the recovery and renewal of the Emirate’s fish stocks.
The documentary was produced by EAD to highlight the roles of some of its employees and the challenges they face while conducting their various tasks and responsibilities. It also features interviews with EAD experts and specialists who emphasise the importance of fishing, the work undertaken by many Emiratis as a main source of income in the pre-oil era. Despite the ubiquitous development in all aspects of life in the UAE and the wide diversity of income sources, fishing remains one of the main sources of income and a valued traditional craft.
The documentary also showcases the perspectives of various fishermen, who are key partners of the agency.
Mohamed Ahmed Al Bowardi, Vice Chairman of EAD, commented, “Abu Dhabi is one of the key stakeholders in fisheries in the UAE, and the improvement of the fish stock and the abundance of demersal species represent very good indicators of the general condition of the country’s territorial waters in the Arabian Gulf.”
He pointed out that natural fisheries in the UAE, like others around the world, are subject to depletion due to several natural and human factors. Studies conducted by the agency show that the fishing sector in Abu Dhabi faced significant pressures, as the overutilisation of fisheries and the sharp depletion of the fish stock led to a more than 80% decline in the fish stock levels in the country. Moreover, several key commercial species declined to unsustainable levels.
He added, “As part of our efforts to protect the fish stocks and encourage sustainable use of fisheries and marine resources, the agency set several controls to manage fisheries in the emirate in a manner that would increase feasibility to utilise and preserve natural resources.”
Razan Khalifa Al Mubarak, Managing Director of EAD, said, “Fisheries are not only a source of revenues or income, as they also have a significant cultural and historical importance. Therefore, Abu Dhabi’s government considers their protection a key priority.”
She added, “We cannot underestimate the importance of early response to protect the marine resources for the current and next generations. After fish caught in the UAE were sufficient to meet the population’s needs, we are now depending heavily on importing to bridge the widening gap between supply and demand. Therefore, we took strict actions and controls that would ease the pressure off fisheries in the commercial and recreational sectors.”
Dr. Shaikha Salem Al Dhaheri, Secretary-General of EAD, said, “This documentary enabled us to highlight some of the main threats facing fisheries in Abu Dhabi, and the internationally-recognised efforts taken by the agency, in cooperation with its partners to manage the fish stocks. Those efforts resulted in creating multiple marine reserves, in addition to deploying a system for licencing commercial and recreational fisheries, and regulating the use of fishing equipment, in addition to imposing a seasonal ban to protect fish during the breeding season. The agency also set a minimum size for fish to be caught for some of the key types and prohibited unsustainable fishing methods.”
According to her, policies, procedures, and administrative controls were taken by the agency led to significant improvement in the fish stocks of some of the main commercial species that were depleted. EAD hopes for further improvement as the compliance with current policies and measures continue in a manner that helps achieve the desired outcomes of environmentally sustained fisheries.
Acting General Manager of Abu Dhabi Media Abdul Raheem Al Bateeh Alnuaimi, said, “With its contribution to the community, Abu Dhabi Media is keen to consolidate its leading position through raising the community’s awareness of various topics and initiatives, as well as reaching its target audience through its various media channels.
“Through airing this documentary, we aim to support environmental and cultural initiatives, highlighting the efforts made by the government to preserve Abu Dhabi’s environment and biodiversity. ‘Our Sea…Our Future’ documentary highlights the efforts of the Environment Agency and the concerned authorities in addressing the environmental challenges resulting from overfishing.”
This is the second documentary produced by EAD about marine resources in the UAE. The first one was “Our Sea .. Our Heritage” produced in 2019 which highlighted the condition of fisheries in the UAE and the long-term protection and recovery plan for fisheries.
Ian Simm, Founder & Chief Executive at Impax Asset Management, writes about achieving a Corporate net-zero possibly through a more sophisticated approach required of all, big or small corporations of all countries. So here it is.
Corporate net zero: we need a more sophisticated approach
The private sector holds the key to decarbonising the economy over the next quarter century. As countries set “net zero” or equivalent targets backed by carefully designed roadmaps for sectors such as energy, transportation and food, there’s a widespread assumption that “national net zero” should mean “net zero for all”, including “corporate net zero” (CNZ) for today’s businesses. Although there are some benefits to unpacking national net-zero targets in this way, there are also several important drawbacks. A more sophisticated approach is urgently required.
Ahead of the COP26 conference in Glasgow later this year, governments are likely to set or raise national targets for decarbonising their economies. In much of the world, the private sector will mobilise to serve rapidly expanding markets, for example for electric vehicles or plant-based food. Experience suggests that we’re about to witness a huge amount of creative destruction as entirely new industries are born, nascent sectors flourish and demand for products and services we once considered permanent fades, threatening or even destroying what have been large companies – a fate similar to landline-based telephony or, potentially, to cash-based transactions.
As the opportunities and risks linked to climate change become mainstream for many companies and their stakeholders, corporate net-zero targets have several attractions. Faced with a simple message that they should develop, analyse and act on specific climate change opportunities and risks, management teams will not only identify ways to improve the company’s risk-adjusted returns but may also produce or facilitate breakthroughs for their customers or suppliers, for example by placing bulk orders for low-carbon products.
Similarly, multiple CNZ commitments across a sector may enable discussions around possible collective action, for example the establishment of clusters to generate and consume “green” hydrogen. Early action by companies can encourage governments to develop further their policies to mitigate climate change, while corporate pledges may unlock capital to catalyse new climate-friendly activities, for example in nature-based solutions.
The drawbacks of a blanket adoption of corporate net zero
And yet there are several crucial drawbacks to the blanket adoption of corporate net-zero targets.
First, and most obvious, is the definition and interpretation of net zero. Apart from the ambiguity around each entity’s pathway to net zero (i.e. “how much, by when?”), the role for offsets is contentious – for example, should a cement manufacturer be able to account for the carbon benefits of its investments in peatland restoration, or if we allow this, does that create a moral hazard (to pollute)? And how should low-carbon technologies be treated: for example, when a new wind farm is built, does it really make sense that the entity purchasing the electricity gets the carbon benefit while the investor (or wind farm owner) receives no such boost to their own carbon accounting?
Second is capital inefficiency. To ensure there’s sufficient “creative destruction” as we reset our economy, we need to avoid hampering the essential sunsetting of certain activities in favour of new ones. The law of diminishing returns predicts that, as companies implement efficiency measures and cost-competitive technologies to reduce their emissions, they will need to consume more and more capital to save the next tonne of carbon, for example, steel manufacturers seeking to switch to direct hydrogen reduction. At the same time, companies producing alternative products, for example construction materials based on wood, may offer much higher financial returns on an equivalent amount of capital with much lower risk. Faced with a choice, investors are likely to prefer the latter.
Third, skills. To pivot successfully to entirely new activities, today’s companies need to harness alternative expertise. For example, can today’s oil majors with their competence in seismology and the handling of liquids, realistically develop a competitive advantage in the development of power projects and in electricity trading to outcompete today’s power generators?
Fourth, value chain effects. Notwithstanding the challenges of measuring so-called “Scope 3” emissions, a company that pursues a net-zero position without concern for its customers or even its suppliers may unwittingly hold back climate change mitigation across the “system” (i.e., the wider economy). For example, if the renewable energy supply required to enable a manufacturer of insulation material to become net zero costs significantly more than the fossil fuel supply it used previously, the price of its product will rise, thereby reducing its potential to assist customers with their energy savings.
Fifth, the “someone else’s problem” effect. It’s too easy for today’s management team to commit a company to long-term targets that they personally won’t be around to deliver on.
And lastly, confusing signals. As decarbonisation progresses, management teams may be faced with a conflict between achieving financial objectives and delivering on the company’s net-zero pledge. This may not matter at the outset, but once the “early wins” in emissions reduction have been secured, difficult conversations about the trade-off between financial and environmental outcomes are, in my view, inevitable.
Climate change resilience first
So, what’s to be done? A sound starting point is to use “corporate net zero” as an agenda item for a deeper discussion on climate change between companies and their investors. But rather than starting that conversation by simply insisting on the adoption of net-zero targets, investors should seek to assess whether the company is already or aiming to become “climate change resilient” using the framework recommended by the Taskforce on Climate-Related Financial Disclosure (“TCFD”) which covers both emissions reductions and physical climate risks.
This should cover the four areas outlined by TCFD:
First, governance: what changes has the company considered and made to ensure that climate change issues are managed comprehensively over a long timeframe?
Second, strategy: how has the company’s business strategy evolved in response, what alternatives has management considered and what will be the impact on the company’s expected return on invested capital?
Third, risk and opportunity: has the company mapped out the key changes in these areas arising from climate change and implemented programmes to monitor them over a long timeframe?
And fourth, metrics, targets and reporting: is the company’s planned reporting in this area likely to provide decision-useful information to shareholders and other stakeholders?
These conversations should lead to a comprehensive, rational plan for each company to manage climate change issues over time, tailored to its individual circumstances. For some, the optimal result will be to adopt a (simple to communicate) corporate net-zero target described in a way that avoids the drawbacks discussed earlier. For others (and in particular, in hard-to-abate sectors), a more appropriate response would be (a) a business plan focused on the efficient use of capital in the context of a wider set of risks, (b) imaginative and proactive collaboration with peers and government to shape new markets, and (c) clear communication with all stakeholders.
We need to be careful that “corporate net zero” does not turn into “one-size-fits-all”. The failure to take a thoughtful and sophisticated approach to these issues is likely to result in management confusion, muddled or misleading external communication and perhaps most significantly, the misallocation of capital. Now is the time to get our proverbial ducks in a row!Report this
The current enthusiasm for “corporate net zero” is understandable, but there are significant drawbacks that are set to lead to confusion and unintended consequences. My take on why, in the face of climate change, companies should follow TCFD guidance and reporting, prioritising sound strategy and resilience.
The United Nations (UN) celebrated on May 10th, 2021, the first edition of the International Day of the Argan Tree, an endemic tree in Morocco.
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