On 21 March 2022, during Blockchain Week in Australia, Australian Senator Andrew Bragg made some interesting statements, one of which was about the legislators’ intention to introduce rules for decentralized autonomous organizations.
This is nothing new, as an Australian Senate committee chaired by Senator Prague in October 2021 recommended that decentralized autonomous organizations be brought under the Companies Act, which sets standards for corporate governance and identity.
The senator’s plan
So what did Senator Andrew Bragg say?
Decentralized autonomous organizations can replace companies. This may be the most significant development since the first joint stock companies appeared on the Amsterdam Stock Exchange in 1602. »
He continued: “If this politician does not pay to listen, he may be able to do so. Given that DAOs are recognized as partnerships instead of corporations, they are not obliged to pay corporation tax. Corporate taxes represent 17.1% of the Commonwealth’s total government revenue. Our confidence in corporation tax is unsustainable. ” “DAOs are a real threat to the tax base and must be recognized and regulated as soon as possible,” Bragg added.
On his website you will find an extended version of the statement, where the senator gives some financial figures that confirm his conclusions.
At this point, I should make it clear that the partnership partners pay taxes, but separately: individuals pay income tax, while companies in the partnership still pay income tax like all other regular companies.
The senator then elaborates on exactly what aspects of the DAO government plans to regulate, “recognizing the fact that DAOs are self-regulated and transparent, with built-in governance.”
He continued, “Treasury must address these issues while leaving it open to DAOs to continue to live up to their name. Any attempt to characterize the code [would be] doomed to fail.”
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And that sounds good, does it?
In fact, with the right implementation, all three goals can be achieved: consumers will be protected from malicious and unscrupulous businessmen, income will be taxed properly, and at the same time the emerging DAO industry will not be suppressed.
Here is the obstacle. All the DAO and fintech bases we have seen in the world so far have followed this bureaucratic path, based on traditional methods and methods. red tape. The difference between them is only in the density of the loop.
The problem is that new methods of regulating this industry are not much discussed in society and among politicians. They are not on the agenda. But these concepts are there, and I have spent five years of my academic research working on them.
Related topics: Decentralized autonomous organizations: Tax considerations
The danger is that because these new concepts have not been introduced, they are not on the agenda of politicians and bureaucrats, so when it comes to organization, they will go back to existing methods, to what they know, which is not good, because they only know the usual ways of organizing. But DAO emerged as a reaction to outdated methods, excessive bureaucracy and bureaucracy.
Read about replacing the company register and the code is the legal form in parts 2 and 3.