How does the tax on intangibles generally perform in terms of compliance?

The tax on intangibles tends to see difficult compliance primarily due to various avoidance strategies employed by individuals and businesses. Intangible assets, such as intellectual property, trademarks, and patents, pose unique challenges when it comes to taxation. Because these assets can often be transferred, licensed, or structured in ways that minimize tax liability, tax authorities find it challenging to ensure compliance.

Additionally, the valuation of intangibles can be complex and subjective, further complicating enforcement and compliance. Taxpayers may utilize different accounting approaches or structures such as offshore entities to reduce their exposure to these taxes. This complexity leads to a situation where compliance is not just about reporting but also navigating a maze of potential loopholes and strategies that can be exploited. Hence, the inherent nature of intangible assets and the strategies that can be deployed to mitigate their tax burden contribute to lower overall compliance.