A New Blockchain-Based Value-Added Tax System

Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 10592)

Abstract

Value-Added Tax or VAT plays an important role in the Indonesian state revenue. Despite its importance, it requires a complex administration process to be done properly. The complexity of the tax administration creates loopholes that can be exploited by dishonest taxpayers to minimize the tax paid to the government. The current system does not prevent the dishonest taxpayers to forge tax invoices which bring tax loss for the government. We utilize the blockchain technology to create a novel approach of implementing the distributed ledger in taxation area. Our proposed protocol creates a transparent and secure VAT system as well as simplifies the process of administering the VAT. The system increases the tax compliance by reducing the risk of tax fraud and increasing the monitoring capability of the tax authority.

Keywords

Blockchain Value-Added Tax Tax credits 

Notes

Acknowledgement

This work was partially supported by Science & Technology Innovation Projects of Shenzhen, China (GJHZ20160226202520268, JCYJ20170302151321095).

References

  1. 1.
    Gillis, M.: Tax Reform and the Value Added Tax: Indonesia. World Tax Reform Case Studies of Developed and Developing Countries. ICEG, pp. 227–250 (1990)Google Scholar
  2. 2.
    Directorate General of Budget Ministry of Finance: Indonesian State Budget 2017 Information Book (2017)Google Scholar
  3. 3.
    Ministry of Finance Republic of Indonesia: Peraturan Menteri Keuangan Republik Indonesia Nomor 151/PMK.03/2013 Tentang Tata Cara Pembuatan dan Tata Cara Pembetulan atau Penggantian Faktur Pajak [Regulation of Ministry of Finance Republic of Indonesia Number 151/PMK.03/2013 about Procedures of Creating and Procedures of Correcting or Replacing Tax Invoice], M.o.F.R.o. Indonesia, Editor, Jakarta (2013)Google Scholar
  4. 4.
    Directorate General of Taxes Ministry of Finance: Peraturan Direktur Jenderal Pajak Nomor PER-16/PJ/2014 Tentang Tata Cara Pembuatan dan Pelaporan Faktur Pajak Berbentuk Elektronik [Regulation of Director General of Taxes Number PER-16/PJ/2014 About Procedures of Creating and Reporting Electronic Tax Invoice], D.G.o.T.M.o. Finance, Editor, Jakarta (2014)Google Scholar
  5. 5.
    Directorate General of Taxes Ministry of Finance: Peraturan Direktur Jenderal Pajak Nomor PER-17/PJ/2014 Tentang Perubahan Kedua Atas Peraturan Direktur Jenderal Pajak Nomor PER-24/PJ/2012 Tentang Bentuk, Ukuran, Tata Cara Pengisian Keterangan, Prosedur Pemberitahuan Dalam Rangka Pembuatan, Tata Cara Pembetulan atau Penggantian, dan Tata Cara Pembatalan Faktur Pajak [Regulation of Director General of Taxes Number PER-17/PJ/2014 About Second Amendment of Regulation of Director General of Taxes Number PER-24/PJ/2012 About Form, Size, Procedures for Filling in Information, Notice Procedure In Order of Making, Procedures for Repair or Replacement, and Procedures for Cancellation of Tax Invoice], D.G.o.T.M.o. Finance, Editor, Jakarta (2014)Google Scholar
  6. 6.
    Nakamoto, S.: Bitcoin: A peer-to-peer electronic cash system (2008)Google Scholar
  7. 7.
    Back, A.: Hashcash-a denial of service counter-measure (2002)Google Scholar
  8. 8.
    Franco, P.: Understanding Bitcoin: Cryptography, Engineering, and Economics. Wiley, New York (2015)Google Scholar
  9. 9.
    Bitcoin Wiki: Full node. 2014, 30 December 2015. https://en.bitcoin.it/wiki/Full_node. Accessed 27 Jan 2016
  10. 10.
    Greenspan, G.: MultiChain Private Blockchain—White Paper (2015)Google Scholar
  11. 11.
    Harding, D.A.: Bitcoin Developer Guide (2015). https://bitcoin.org/en/developer-guide. Accessed 12 Jan 2016
  12. 12.
    Mattila, J.: The Blockchain Phenomenon. In: The Blockchain Phenomenon. Berkeley Roundtable of the International Economy (2016)Google Scholar
  13. 13.
    Wijaya, D.A.: Extending asset management system functionality in bitcoin platform. In: 2016 International Conference on Computer, Control, Informatics and its Applications (IC3INA). IEEE (2016)Google Scholar
  14. 14.
    PricewaterhouseCoopers: How blockchain technology could improve the tax system (2016)Google Scholar
  15. 15.
    Ainsworth, R.T., Shact, A.: Blockchain (Distributed Ledger Technology) Solves VAT Fraud (2016)Google Scholar
  16. 16.
    Ainsworth, R.T., Viitasaari, V.: Payroll Tax & the Blockchain (2017)Google Scholar
  17. 17.
    Maxwell, G. Deterministic Wallets (2011). https://bitcointalk.org/index.php?topic=19137.0. Accessed 12 Sep 2015
  18. 18.
    Wuille, P.: Hierarchical Deterministic Wallets (2012). https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki. Accessed 29 Feb 2016
  19. 19.
    Andresen, G.: Pay to Script Hash (2012). https://github.com/bitcoin/bips/blob/master/bip-0016.mediawiki. Accessed 9 Jan 2016
  20. 20.
    Mark Friedenbach, B., Nicolas Dorier, K.: Relative lock-time using consensus-enforced sequence numbers (2016). https://github.com/bitcoin/bips/blob/master/bip-0068.mediawiki
  21. 21.
    Harding, D.A:. Sequence Number (Transactions) (2015). https://bitcoin.org/en/glossary/sequence-number. Accessed 12 Jan 2016

Copyright information

© Springer International Publishing AG 2017

Authors and Affiliations

  1. 1.Faculty of Information TechnologyMonash UniversityMelbourneAustralia
  2. 2.Data61CSIROMelbourneAustralia
  3. 3.Directorate General of TaxesJakartaIndonesia
  4. 4.College of Information EngineeringShenzhen UniversityShenzhenChina

Personalised recommendations