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Describing Globally Distributed Software Architectures for Tax Compliance

Tax Compliance in Software Engineering Software Architecture Simulation
Table of Contents
Preprint - submitted to TOSEM

Authors
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Michael Dorner, Maximilian Capraro, Oliver Treidler, Tom-Eric Kunz, Darja Šmite, Ehsan Zabardast, Daniel Mendez, and Krzysztof Wnuk

Abstract
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Background: The company-internal reuse of software components owned by organizational units in different countries is taxable.

Objective: In this article, we introduce the concerns of tax authorities as stakeholders and investigate how software companies can describe their globally distributed software architectures to tax authorities.

Method: In an experimental simulation, we (1) develop a viewpoint that frames the concerns of tax authorities, (2) create a view of a large-scale, globally distributed microservice architecture from a multinational enterprise, and (3) evaluate the resulting software architecture description with a panel of four tax experts.

Results: The panel found our proposed architectural viewpoint properly and sufficiently frames the concerns of taxation stakeholders. The architecture description reveals that almost 70% of all reuse relationships between the 2560 microservices from our case company are cross-border and, therefore, taxable. However, unclear jurisdictions of owners and potentially insufficient definitions of code ownership and software component introduce significant noise to the view that limits the usefulness and explanatory power of our software architecture description.

Conclusion: Although our software architecture description already provides a solid foundation and reveals the importance of tax compliance in software architectures, we stumbled over several fundamental open questions, forming new frontiers in software engineering.

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