China Approves The First Tax Authority Invoice On Blockchain
EEO reports on August 10 show that Shenzen, a city in southeastern China has issued the first digital invoice on the blockchain.
Developed by Tencent, this is the first use of the pilot blockchain ecosystem to issue digital invoices. Tencent, who is also the developer of the social media platform WeChat, that has about one billion users is working with the Shenzen Municipal Taxation Bureau.
EEO reports that this project is the only one of its kind that has managed to get an official approval from the State Administration of Taxation. It is designed to cater for the overall use of merchants, consumers as well as the tax authorities. All official invoices in China are referred to as “fapio” to show that they are from the Chinese Tax Bureau for goods and services bought within the country.
According to the report it is a local Shenzen restaurant that issued this debut invoice on August 10. A few other merchants within this area have also been authorized to use this system. These include an auto repair shop, café and a parking lot.
The system is connected to the social platform WeChat that allows consumers to make payments then generate an invoice that is eligible for inspection and management by the tax officials. The general manager of the blockchain at Tencent said that the system works to enable a seamless connection between the tax authorities and consumer transactions.
It has replaced the traditional scenario of processing invoices that required a lot of cumbersome and complicated steps. In the traditional system, the consumer had to wait for the merchant to generate the invoice after a transaction, which is then filed away, then wait for the merchant to fill a returns form from the finance department, which then has to wait for the processing of the return before the consumer can receive the returns. That is a rather long and time-wasting process.
EEO asserts that the blockchain eliminates the long and cumbersome process by allowing the consumer to simply to manage the entire steps by a simple click on the WeChat platform immediately after checking out. The consumer can then track their returns status in real time. You never have to wait for any documents to be filed as everything is recorded on the blockchain.
The blockchain technology, as noted by EEO, provides a transparent and immutable record-keeping platform that is consistent with supervision process of the invoices. This system traces the source, authenticity and accountability of all the invoices within the system and does not allow for any unauthorized alteration. It has in effect solved the challenges faced by traditional systems like false-reporting, over-reporting and any other inconsistencies during the long invoice processing and circulation.
Blockchain also improves data privacy through its up to date encryption system and saves a lot of money and time thanks to the streamlined process that has reduced the existing bureaucracies.
In the recent past, Cointelegraph had reported on the on going cooperation between Tencent and the Municipal Office of the State Administration of Taxation of Shenzen, of their intention to initiate the “Intelligent Tax” Innovation system that is aimed at modernizing tax management and eliminate corrupt and fake instances of invoice processing using the blockchain technology.