Blockchain Technology To Track VAT Payments – Thailand’s Revenue Department is testing out the use of blockchain technology to track value-added tax (VAT) payments. The major objective of the department is to prevent fraud in VAT refund claims in the country. The VAT is a form of consumption tax specifically paid for goods and services.
If the test works successfully, then Thailand could become the first country in the world to use distributed ledger technology (DLT) for tax purposes. If a company buys goods from another company, the former can issue VAT invoices for the latter. Later, both parties can use DLT to confirm the transactions. Due to the features of Blockchain’s technology, such as immutability and transparency. Similarly, the implementation will ensure a fair and efficient transaction process.
According to Ekniti Nitithanprapas, director general of the Thai Revenue Department “Blockchain would essentially help with the verification of authentic invoices and the rejection of any invoice that did not fit that category”. He further added that the agency is trying to adopt different technologies to help them, such as: machine learning, Big Data, and artificial intelligence in order to reduce tax evasion and fraud.
Thai government’s interest
Blockchain Technology To Track VAT Payments – Nitithanprapas mentioned that the department is currently working towards digitizing of the national tax collection body. The Thai government’s interest in using blockchain technology is not new. In June 2018, Dr. Veerathai Santiprabhob, the Governor of the Bank of Thailand, hinted at utilizing blockchain technology to enhance existing banking applications.
At the time, Santiprabhob stated:
“We are working closely with the financial industry to apply [blockchain technology] to various banking applications. [Additionally] The Thailand Blockchain Community Initiative was officially announced at the Bangkok FinTech fair in March of this year.”
In May, China took a similar path with their tax authorities. The Shenzhen National Taxation Bureau chose to battle back against tax evasion. With the support of Tencent, a local internet conglomerate. This project was initially made as an approach to create digital invoices for goods and services. Since these invoices couldn’t be imitated on the blockchain for a false proof of purpose. It would help to reduce fraud and enhance the invoice supervision process
Alongside Thailand’s choice to enhance their tax payments, they have also started using blockchain technology in different use cases. The Bank of Thailand created their very own crypto for interbank transactions, in June. In order to make the process faster and less costly. In the next month, July, the Thailand Bond Market Association, a self-regulatory group, reported that they were working on a private system which will increase the rate of corporate bond settlements.