Blockchain Technology Application for Value-Added Tax Systems

Milla Sepliana Setyowati,Adang Hendrawan,Arfah Habib Saragih,Niken Sila De Utami

doi:10.3390/joitmc6040156

Milla Sepliana Setyowati, Adang Hendrawan + Show 2 more

Open Access

https://doi.org/10.3390/joitmc6040156

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Abstract

The utilization of new technology in the form of blockchain technology for a Value Added Tax (VAT) acceptance system is relatively new and has not been widely encountered thus far. This research analyzes how blockchain technology can be applied to a VAT system, particularly for electronic invoices (e-Invoice). A qualitative approach was used in this study to analyze blockchain technology models that could be applied in a VAT system. The results of this study indicate that due to its characteristics, blockchain technology can only be applied to taxpayer data that do not require privacy. Data that are considered safe if distributed to nodes in the blockchain technology network include the Tax Invoice Serial Number (TISN). A TISN system based on blockchain technology will produce a faster and more efficient system. Transactions on the TISN in Indonesia can also be monitored and tracked directly by the Directorate General of Taxation (DGT). Blockchain technology can be applied in the TISN system by using a permissioned private blockchain type.

Highlights

All countries are entering the era of industrial revolution 4.0, where almost all aspects of human life are facilitated by technological developments
Blockchain technology can be applied to Value Added Tax (VAT) data that is safe to distribute, namely the Tax Invoice Serial Number (TISN)
The type of blockchain technology that can be applied in the TISN system based on blockchain technology is a permissioned private blockchain, which allows the Directorate General of Taxation (DGT) to run a private but still customizable blockchain system where the DGT can determine which parties are to be nodes and the extent of authority of those parties have in the blockchain technology network

Summary

Introduction

All countries are entering the era of industrial revolution 4.0, where almost all aspects of human life are facilitated by technological developments. If the era of industrial revolution 4.0 is carefully prepared for, positive impacts, such as an increased speed of information development, higher productivity, and increased ease of access to information will be obtained [1]. These opportunities must be put to good use, especially by developing countries, to improve the economy and the welfare of the people. The economy and people’s welfare can be improved because the increasing flow of trade transactions between businesses and their counterparties results in a greater potential for governments to obtain tax receipts. The Organization for Economic Co-operation and Development (OECD) states that rapid technological advances, digitization, and business patterns have led to continuous transformation and adjustment in tax systems [2]

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