*Will blockchain revolutionize the tax systems around the world?

As governments and local authorities around the world struggle with budgets imbalance, improvements in tax collection systems become a hot topic. The blockchain technology is recently gaining much interest among tax experts and government officials, as a potential solution to the tax evasion problem.

A PWC report states that the “blockchain technology – a distributed ledger that allows anything of value to be traded securely, transparently and without the risk of tampering – could be just what the world of tax is waiting for. It has the ability to deliver real-time, reliable information to a wide group of people, and create a system where both taxpayers and tax authorities have equal confidence in the veracity of the data collected. It could make it easier for people to pay tax and for governments to narrow the tax gap.” See the report at https://www.pwc.co.uk/issues/futuretax/how-blockchain-technology-could-improve-tax-system.html.

2018 was a breakthrough year for the acceptance of the blockchain technology by tax collection authorities. The Revenue Department of Thailand is testing blockchain to track value-added tax (VAT) payments (https://www.bangkokpost.com/business/news/1586614/blockchain-undergoes-tests-for-tracking-vat-payments). The tax authority in the Chinese city of Shenzhen is using the blockchain technology in fighting tax evasion (https://toshitimes.com/fighting-tax-evasion-with-blockchain-one-chinese-city-leads-the-fight/). Recently Germany announced considering the use of the blockchain technology to combat tax evasion. Poland’s Ministry of Digital Affairs has created a working group of experts to study the application of distributed ledger and the blockchain technology to digitalize government services.

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