Tax in blockchain

Most businesses expend large amounts of time and resources on managing their invoicing, using a plethora of different accounting platforms and many amongst those battle to ensure their revenues are reported correctly to the tax office. 

This can be a massive headache to smaller businesses and an administrative nightmare to larger businesses, opening the door to errors and even deliberate malfeasance. In addition, businesses are often left having to chase late payments, with no easy way to warn other businesses of bad payers, where payment terms are not honoured.

We helped develop and pilot an invoicing system that would provide a uniform platform for businesses to use to issue invoices, chase payment and score payer responsivness. Each invoice produced is automatically added to a national supplier blockchain, recording the recipient, the amount, date issued and date payment is due. Each invoice is then monitored for payment and overdue payment automatically chased.

🔹 Payment receipt

Once payment is received, the issuer acknowledges receipt of payment, the date payment was received and the final amount received, and then the entry in the supplier blockchain is closed. 

🔹 Payment overdue

If payment is overdue, the tax office sends automated reminders to the recipient, reminding them of an overdue payment and the effects of late payment of their overall payer score.

🔹 Payer scoring

Recipients receive a payer score that is calculated based on the timeliness of them paying, combined with the number of historical payments they've made so far within the blockchain record. Patterns of early payment will elevate their payer score, while repeated late payments will reduce their score.

The payer score within the national supplier blockchain provides all suppliers with an independent method of assessing potential payers credit-worthiness, before conducting any business.

The largest benefit is to the tax office, where the use of the supplier blockchain provides transparency across all the national supplier transactions.

🔹The tax administration burden is reduced from the suppliers.

🔹Government tax revenue forecasting and measurement becomes more accurate.

🔹On time payment is increased for all businesses through transparent scoring and measurement.

At all times, the supplier blockchain remains immutable, so no supplier or payer can hide or manipulate their transaction records, including their pay-on-time record.