Project by the Beijing Municipal Taxation Bureau
- Beijing Municipal Taxation Bureau announced a pilot project for the blockchain-based invoice system.
- This system should prevent receipts that are used to evade taxes or claim falsified expenses.
- This project is not the first of this kind in China. Back in May 2018, Shenzen’s government was reported to cooperate with the software giant Tencent to develop blockchain-based taxation systems.
- Earlier in March, another report mentioned a blockchain-based system for parking lot taxation by the Beijing Municipal Taxation Bureau.
FinTech, Controlling, Finance, Public sector
What is Blockchain?
Blockchain is an IT technology which can be best compared to a database. You can write informations into the blockchain, much like you write information in a database or your Excel spreadsheet.
Other than your regular database a blockchain is stored (a) on multiple computers which are owned by independent parties, (b) the information inside the blockchain can only be added, never deleted (note: this is also true for write-only databases) and (c) the conflicts in different states of the blockchain are solved by computers (with the so-called consensus algorithms) and not by human intermediaries.
Why is blockchain used here?
A blockchain-based system is enabling an audit trail of invoicing documents which is reliable for all parties involved.
Depending on the project a centralized immutable database could be an alternative to using blockchain here. However, a database is usually controlled and operated by a single party and may be more vulnerable to data hacks. Due to its decentralized nature blockchains (when done right) are not controlled by a single point of fault and are very secure.