Chinese City to Utilise Blockchain to Fight Tax Evasion
Shenzhen’s tax authority has partnered with Chinese internet giant, Tencent, to combat tax evasions in the city.
According to an announcement on Thursday, Tencent and the Shenzhen National Taxation Bureau have been jointly working towards setting up an innovation lab called ‘intelligent tax’, with an aim to introduce technological innovations to improve taxation process.
The release states that the innovation lab will provide new innovations for better taxation management and electronic invoicing applications, with the confluence of some theoretical research and nascent technologies like blockchain, cloud computing, AI (artificial intelligence), and Big Data.
According to The New York Times, China has a sizable underground economy, and Shenzhen is no exception. To comprehend Shenzhen’s underground economy, one only needs to visit transportation depots to see peddlers hawking bogus receipts. Buyers use fake paperwork and documents to evade taxes and swindle employers out of money, and this detecting these forged documents poses a serious challenge for tax collectors, small businesses, and the government.
According to Ma Huateng, CEO and chairman of the board at Tencent, said the Intelligent Tax innovation lab has started working on a new invoice based on blockchain tech – a valid digital receipt that will serve as a proof of purchase of goods and services, before the law. This blockchain-based solution will be the Intelligent Tax lab’s first product, he added.
The invoice product will be the country’s first ever research into the application of nascent technology for digital invoicing and will be based on TrustSQL, Tencent’s new blockchain platform announced last month.
The digital invoice will include complete traceability and provide data security as one of its key features. These features will help the government fight forged invoices and ameliorate invoice supervision process, Li Wei, Deputy Director of Shenzhen Municipal Bureau claims.
He added that the partnership is focused on promoting tax modernization and overall improving the city’s economic quality.