According to details published in a blog post, Tencent has begun a pilot program in a local restaurant in Shenzhen, China. Users will pay their bills via an existing payment service, WeChat Pay.
With this service, payment data is fed over the blockchain platform to the user’s employer, the local tax authority, and the restaurant. According to Tencent, delays often occur via the standard manual claim process. However, all of these will be eliminated in the new system. Thus, the company hopes that this system will help to hasten and streamline the process of expense reimbursement. Besides that, it will help to reduce the prevalence of false receipts.
The Current Situation
Right now, China uses a complex system where merchants issue different payment receipts for firms and individuals. When staff needs to be reimbursed for dining expenses, they need to request a receipt for companies that list the taxpayer number of the employer.
For this to happen, employees must have the merchant manually type in the taxpayer number of a receipt every time. Besides that, the process is often followed by other manual tasks. For instance, they have to collect receipts and file a claim before they get their refund. Besides restaurants, other merchants that are part of this trial system are a parking lot at the Shenzhen Bao’An Stadium, an auto repair service center, and a restaurant run by Tencent.
Tencent Is Actively Fighting Tax Evasion
The reason Tencent is turning to the blockchain is to fight tax evasion, which is a concern within China. Tencent is working with the government of Shenzhen to create an Intelligent Tax innovation lab. The aim is to promote the digitization of the tax process.
This project became necessary due to the vast underground economy of Shenzhen. It is quite common to find peddlers selling fake tax receipts. These receipts are often used to evade tax and defraud the employer. According to an official in Shenzhen, the solution they are creating will enable full traceability and data security. This will help authorities fight fake invoices.
In China, merchants need to purchase various receipts, called fapiao from the government. These act as advanced tax payments before any sale. As the receipts are issued via ongoing sales, merchants calculate the difference between the prepaid and actual amount. This is used to determine the next round of tax payment. However, this process is open to falsification, which means China loses money gained through taxation.
Tencent said that by placing the issuance process on the blockchain, it will offer the government a paperless tax system. Thus, it will be able to track circulation of all receipts with just a few keystrokes. This could help to increase tax collection and improve government services for the people of Shenzhen.
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