Describing Globally Distributed Software Architectures for Tax Compliance

Background: The company-internal reuse of software components owned by organizational units in different countries is taxable. To comply with international taxation standards, multinational enterprises need to consider a geographical perspective on their software architecture. However, there is no viewpoint that frames the concerns of tax authorities as stakeholders towards a globally distributed software architecture. Objective: In this article, we introduce the reader to the concerns of tax authorities as stakeholders and we investigate how software companies can describe their globally distributed software architectures to tax authorities. Method: In an in-virtuo experiment, 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 of tax experts found that our proposed architectural viewpoint properly and sufficiently frames the concerns of taxation stakeholders. However, the resulting view falls short: Although the architecture description reveals that almost 70% of all reuse relationships between the 2560 microservices in our case are cross-border and, therefore, taxable, unclear jurisdictions of owners and a potentially insufficient definition of ownership introduce significant noise to the view that limits its usefulness and explanatory power of our software architecture description. Conclusion: Although our software architecture description provides a solid foundation for the subsequent step, namely valuing software components, we stumbled over several theoretical and practical problems when identifying and defining ownership in distributed teams, which requires further interdisciplinary research.