China issues first invoice on blockchain

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A restaurant in China’s metropolis Shenzhen has issued the first electronic tax authority approved invoice on blockchain. It’s based on Tencent Holding’s pilot blockchain ecosystem. It will help in simplifying the invoicing and tax deduction process and prevent possible frauds. Tencent Holding, the developer of China’s platform WeChat, is working on this project together with the Shenzhen Municipal Taxation Bureau.

By using this pilot blockchain ecosystem, the consumer who pays via WeChat will get an instant electronic invoice on their phone. Currently, the invoicing and tax reimbursement process requires a number of challenging steps. Using blockchain technology, consumers will be able to go through these steps only with one click on the WeChat app.

The rise of the black market

In China, they call official invoices as “fapiao”. Individuals and businesses use them to get tax deductions and reimbursements. Being a perfect ground for various machinations and frauds, the tax system is often exploited. Therefore, the fapiao black market is expanding. One of the biggest problems of this 13 million people city is a growing shadow economy. It’s easy to buy fake invoices on the black market. People use them to evade taxes and defraud employers.

In order to avoid fake invoices, Tencent blockchain ecosystem is using distributed ledger. They use it for issuing, verifying and tracking invoices that are used for tax deductions, making it impossible to tamper with invoice information. During this trial period, Shenzhen government chose companies from different fields to participate in blockchain electronic invoice project. They include restaurants, cafes, payable parking lots, and car repair shops. The Shenzhen tax bureau and Tencent launched an innovation lab in May, aiming towards improving tax services and preventing risks using blockchain, big data, cloud computing, and artificial intelligence.

Shenzhen taxation authority stated that it would continue to support more enterprises to start issuing out blockchain based e-invoices in the future.

Source:  Cointelegraph

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