China has accelerated its developments and applications in the budding blockchain space. After a successful rollout in Shenzhen in 2019, China’s blockchain invoicing system is now being introduced to the capital.
The Beijing Municipal Office of the State Administration of Taxation on March 2 announced its decision to unveil a city pilot for this blockchain-based system. It did that with instant activation for taxpayers in some chosen industries.
This platform is a tool that will be used by the Chinese tax bureau to combat the underground “fapiao” market. In this market, fraudulent receipts have been used in the past. Criminals use them to defraud employers, evade taxes, and claim falsified expenditures for reimbursement.
In China, the term “fapiao” refers to official invoices issued by the Chinese Tax Bureau for goods and services bought in the country.
The system guarantees traceability
According to the Beijing authorities, electronic invoices that use the blockchain network use smart contracts and encryption algorithms to entirely secure the issuance, transmission, storage, security and even anti-counterfeiting resilience of documents. This system allegedly provides complete traceability and tamper-resistance, which guarantees that the data stored cannot be altered after the fact.
By using a private or public-private hybrid chain, this system acts as a bridge. It connects the invoice issuer, the tax department, and the recipient. In turn, it provides oversight on the circulation, compensation, and reporting process.
Although the latest announcement does not point to any private sector partner in the initiative clearly, the system that was launched in Shenzhen was created in partnership with Tencent. Tencent is the developer of the WeChat social media platform that has over 1 billion users.
The users need little more than a personal laptop or a cell phone to interface with the system that maintains the operational costs low. It is also meant to create “a healthy and fair tax environment” in Beijing’s opinion.
The municipal office discovered in the announcement that President Xi Jinping has been presiding over a combined study on blockchain technology. This study was conducted by the Central Politburo of the Communist Party of China, and it has been happening since October 2019.
The members occupying the pinnacle of the state apparatus have judged this technology already. They say it is an excellent application that can be utilized in all walks of life. Hence, the Beijing pilot is presented as part of a series of reforms. These reforms are dedicated entirely to the decentralization of state services using blockchain technology.
Beijing’s blockchain technology program
Earlier in the week, the Chinese state blockchain strategy enjoyed further development. China’s central bank earmarked an additional 30 million Yuan into its blockchain trade finance platform.
The latest investment creates a part of the People’s Bank of China’s efforts to guarantee that the small and medium-sized firms can access a wide range of financing options. They aim to help these firms during this period, majorly affected by the coronavirus epidemic.
The Chinese government and medical agencies have been quick to spearhead new technological solutions beyond trade financing. All these developments are meant to thwart the coronavirus crisis with at least 20 new blockchain applications launching in the first two weeks of last month alone.