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In 2014, the Thailand Department of Revenue had arrested many people and investigated about 60 companies for defrauding the $ 18.29 million baht department in value added tax (VAT). Since then and earlier, the department has not been able to track down most of these defaulters, losing billions of dollars in the process.
So could the blockchain be the solution that could minimize tax fraud? The general director of the revenue department believes he can.
Ekniti Nitithanprapas, in his latest comments to the Bangkok Post, revealed that their department is conducting a blockchain trial to explore its case of use in tracking VAT payments. The tax compliance officer acknowledged that there was an increase in the number of cases involving false VAT invoices. He said he created a particular innovation lab to test the potential of blockchain in minimizing such cases, drawing inspiration from his case of use in verifying bitcoin transactions.
"The blockchain is expected to help verify VAT invoices that could help eradicate false invoices for VAT returns," said Nitithanprapas. "For example, when a company buys products from a second company, the first company will issue VAT invoices to the latter and both companies will be able to use blockchain to confirm transactions."
The Blockchain marries the fiscal control
Since its launch, blockchain has surpassed other emerging technologies both as regards the hype and the inflow of investments. Businesses and government agencies, in particular, have shown interest in adopting technology primarily to use its core attributes, which are transparency, security and information in real time.
PwC, one of the Big Four Auditor, has also recognized blockchain to detect errors and fraud in the tax warehouse more efficiently than traditional systems, stating:
"Blockchain makes frauds and errors much easier to detect because the system provides clear and transparent information about transactions and items on the network, which could be particularly useful for tracking down where and where VAT has been paid, and by doing so reduce VAT fraud ".
The Thai blockchain driver marks a step towards achieving a full-fledged solution to minimize tax evasion, Nitithanprapas said. The chief revealed that their tax fraud solution would combine the skills of the digital ledger with that of machine learning and artificial intelligence "to learn and study tax fraud practices to examine efficiently tax payments and forcing more people to enter the official tax system. "
Prior to Thailand, the tax authority in China had also initiated a similar blockchain process in May to detect tax evasion in the country. They collaborated with the Internet giant Tencent to create digital invoices on the blockchain, which could be verified by the participating nodes in real time.
Shutterstock foreground image.
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