How the Estonian Tax and Customs Board Evaluated a Tax Fraud Detection System Based on Secure Multi-party Computation

  • Dan Bogdanov
  • Marko Jõemets
  • Sander Siim
  • Meril Vaht
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 8975)

Abstract

The Estonian Tax and Customs Board (MTA) has identified that Estonia is losing over 220 million euros a year due to avoidance of value-added tax (VAT). The parliament proposed legislation that makes companies declare their purchase and sales invoices for automated risk analysis and fraud detection. The law was vetoed by the Estonian President on the grounds of confidentiality breach and unnecessary burden to companies. In this paper, we report on our collaboration with MTA to build a tax fraud detection system prototype that uses secure multi-party computation (SMC) to remove the companies’ concerns over confidentiality. We estimate that the prototype could process a month of Estonian VAT data in ten days running on 20 000 euros worth of hardware.

Keywords

Tax fraud detection Risk analysis Secure multi-party computation Case study 

References

  1. 1.
    The transaction information system for 1000-euro purchases will be completed in November. Ärileht, 22 October 2013. http://arileht.delfi.ee/news/uudised/mta-1000-euroste-arvete-tehinguinfo-susteem-saab-valmis-novembris.d?id=66955998 (in Estonian). Accessed 5 September 2014
  2. 2.
    State Budget Strategy of Estonia 2015–2018. http://www.fin.ee/doc.php?110953. Accessed 5 September 2014
  3. 3.
    The Sharemind secure database and application server. http://sharemind.cyber.ee/. Accessed 5 September 2014
  4. 4.
    Ilves Blocks Amendment for Sweeping Disclosures in Tax Filing. National Public Broadcasting News, 19 December 2013. http://news.err.ee/v/politics/5b358dbd-8836-43ca-992c-973d206a3ec6. Accessed 5 September 2014

Copyright information

© Springer-Verlag Berlin Heidelberg 2015

Authors and Affiliations

  • Dan Bogdanov
    • 1
  • Marko Jõemets
    • 1
  • Sander Siim
    • 1
    • 2
  • Meril Vaht
    • 1
  1. 1.CyberneticaTallinnEstonia
  2. 2.Institute of Computer ScienceUniversity of TartuTartuEstonia

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