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Blockchain-based Invoices in Beijing!
The Frauds with False tax invoices are increasing day by day. We are hearing news where crores of amounts are fraudulently claimed as INPUT taxes, Tax evasion, False invoices generation, etc.
What if these invoices are issued in the blockchain network itself? What if these invoices are embedded in a network that is accessible to Tax authorities?
The answer is NO tax Evasion and NO false tax claims and full transparency.
China has launched its proposed project where invoices shall be issued via Blockchain. The Tax structure is slightly different in China where the establishment’s purchases credits of tax from the government in advance. The concept is called Fapiao.
A fapiao is a legal receipt that serves as proof of purchase for goods and services. The larger fapiao invoice system, however, is an essential component of China’s tax law, and compliance for businesses.
The country’s tax authorities require businesses to use fapiao to compel companies to pay tax in advance on their future sales. In this way, China’s fapiao invoice system serves as a paper warranty against tax evasion, unlike other countries where invoices serve as a tax receipt.
Beijing is currently implementing blockchain in the fapiao concept of Invoicing,
Happy Reading…
Following a successful rollout in Shenzhen last year, China’s blockchain invoicing system is being introduced to the capital.
On March 2, the Beijing Municipal Office of the State Administration of Taxation announced its decision to launch a city pilot for the blockchain-based system, with immediate activation for taxpayers in selected industries.
The platform is a tool for the Chinese tax bureau to tackle the underground “fapaio” market, where fraudulent receipts have been used to evade taxes, defraud employers, or claim falsified expenditures for reimbursement.
In China, “fapiao” is a term for official invoices issued by the Chinese Tax Bureau for goods and services purchased in the country.
The system ensures traceability and modernizes tax processes
As the Beijing authorities outline, electronic invoices using the blockchain make use of smart contracts and encryption algorithms to secure the issuance, storage, transmission, security and anti-counterfeiting resilience of documents.
The system reportedly offers complete traceability and tamper-resistance — ensuring that data cannot be modified after the fact.
Using a private or public-private hybrid chain, the system mediates between the tax department, invoice issuer, and recipient, providing oversight on the circulation, reimbursement and reporting process.
While this month’s announcement does not refer to any private sector partner in the initiative explicitly, the system launched in Shenzhen was developed in collaboration with Tencent, the developer of the 1 billion-user social media platform WeChat.
Users require little more than a cell phone or personal laptop to interface with the system, which keeps operational costs low and will foster “a healthy and fair tax environment” in Beijing’s eyes.
The municipal office noted in the announcement that President Xi Jinping has been presiding over a collective study on blockchain technology conducted by the Central Politburo of the Communist Party of China since October 2019.
Those at the very top of the state apparatus have judged the technology to have had “very good applications across all walks of life.” The Beijing pilot is therefore presented as part of a series of reforms dedicated to the decentralization of state services using blockchain.
