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Main problems in promoting taxpayers' tax compliance from the perspective of blockchain

Time : 02/01/2022 Author : ad5qp9 Click : + -
        The technical characteristics of the function layer and the application layer are deeply integrated with the intelligent application scenario of tax management, which optimizes the technical environment of taxpayers' tax compliance and helps to promote taxpayers' tax compliance. Although the application of blockchain technology has brought new advantages to the improvement of taxpayers' tax compliance, it also faces problems such as technical security and taxpayers' applicability. Although blockchain has the technical characteristics of non tamperability and traceability, which helps to ensure the security of tax information data, this "security" is not absolute security, and may affect taxpayers' trust in blockchain technology to a certain extent, thereby affecting taxpayers' tax compliance. On the one hand, the blockchain may be subject to a 51% doublespendingattack. When the blockchain is controlled, the tax authorities may not receive the tax, but the taxpayer's tax payment occurs repeatedly.
        The main reason is that the mining nodes in the blockchain compete for bookkeeping through workload proof. If someone controls more than 51% of the computing power of the whole network, he can create a side chain longer than the public chain, conduct reverse transactions, and cause double expenses. In fact, bitcoin gold BTG, the 26th largest cryptocurrency in 2018, was attacked by 51% of double flowers. Malicious nodes prepared a lot of computing power in advance to cash out, and the final system loss was as high as $18.6 million. It can be seen that the blockchain technology based on POW consensus may be attacked by 51% of "double flowers", which cannot guarantee the absolute security of the data, and will cause taxpayers to worry about the credibility of tax payment and tax records to a certain extent.
        On the other hand, the application of blockchain technology in the field of tax management is obviously decentralized. In this case, tax data is not centralized in the tax department. All nodes of the blockchain participate in the management and maintenance of data, that is, each node has the same permissions. With the gradual decentralization of the control of the tax department over the data, some entities may reach a conspiracy to arbitrarily tamper with the data on the chain, while external participants and regulators cannot confirm the authenticity of the alliance chain data. The data on the blockchain is recorded by the buyer and the seller according to the transaction situation, and the blockchain electronic invoice is issued. Without confirmation by the tax department, it may be easy for the two parties to form interest groups and collude with each other.
        This situation will also weaken the credibility of blockchain technology. By eroding the tax base, it will cause the loss of national tax revenue and reduce taxpayers' tax compliance. Blockchain technology adopts asymmetric encryption algorithm, encrypts data with public key, decrypts only with the corresponding private key, and accesses the transaction information stored on the chain only with the authorization of the data owner, thus ensuring the transmission security of data and the privacy protection of node information. At the same time, transparency rules make the source code of many blockchain networks completely transparent, and anyone in the blockchain network may gain the trust and information of potential users after being authorized. The characteristics of blockchain openness and transparency and privacy protection conflict. In terms of data collection and application, the boundary between data disclosure and privacy protection is not clear enough. What data can be disclosed on the chain? Which information of the main body in the chain should be encrypted?.
        Enterprises may regard the data on the chain as trade secrets, so the enthusiasm of data sharing is not high. How to balance the social interests and the privacy of the subjects on the chain? Such problems need to be solved urgently. In addition, all platforms built based on blockchain technology operate independently. Take blockchain electronic invoice as an example. At present, the regional information of blockchain electronic invoice is not interconnected. In other words, the blockchain electronic invoice has a certain regional nature, so it is easy to form an information island, which makes the information asymmetry between the internal and external entities on the chain, the tax department cannot fully grasp the real situation of the taxpayer, or the taxpayer does not understand the tax laws and regulations, etc., resulting in the taxpayer's non-compliance with tax.
        The conflict between privacy protection and transparency is not an either or "zero sum game". Therefore, how to find a balance between the two is particularly important. On May 25th, 2018, the European Union issued the general data protection regulation (gdpr), clarifying the subject (right subject, obligation subject and supervision subject) and object of personal data protection and their rights and obligations, and establishing an accountability mechanism for violations of personal data protection. Gdpr is a centralized normative paradigm for centralized data collection, storage and processing, while blockchain technology is a new decentralized paradigm for data collection, storage and processing, which are incompatible in nature (Zeng Wei, 2020; Liu Ningyuan and Yan Fei, 2020).
        For example, according to Article 5, item 1, D, and Article 16 of the gdpr, personal data should be accurate and updated in a timely manner, and data that does not meet this requirement should be deleted or corrected in a timely manner; The data subject has the right to receive the correction result of the error information from the data controller in time. Blockchain is a kind of tamper proof distributed ledger. Unless in very special circumstances, the information on blockchain cannot be changed. According to gdpr Article 5, item 1, Paragraph C, the processing amount of personal data is limited to the minimum amount required to meet the purpose, and no unnecessary personal data shall be collected. This provision is also known as the principle of data minimization.
        In the blockchain, especially in the public chain, the data maintenance of each node will be automatically synchronized, and the data access will not be restricted. The application of blockchain technology in the field of taxation is incompatible with gdrp, which may affect the practical application of blockchain technology in the field of Taxation, and then affect taxpayers' tax compliance. How to balance the two is also questionable. On the one hand, China's current tax laws and regulations on blockchain are not perfect, but with the wide application of blockchain technology in the tax field, especially the rapid development of digital economy, blockchain technology has a great impact on the applicability of current tax laws and regulations.
        There is a mismatch between the existing laws and the actual situation. The contradiction between the applicability of the tax law and the need to use blockchain technology for tax governance will become more and more prominent, and the need to improve blockchain tax laws and regulations will become more and more urgent. On the other hand, the blockchain involves many subjects, such as tax authorities, taxpayers, enterprises, etc., whose rights, obligations and legal relationships need to be further clarified. At the same time, due to the lack of overall planning of tax management relying on blockchain technology, the lack of relevant tax legal systems and the lag of tax collection and management technology, the declaration of tax related matters and the collection of taxes rely more on the consciousness of taxpayers. Taxpayers are rational. Motivated by the maximization of their own interests, they may conceal tax related information to achieve the purpose of paying less or no tax, thus reducing taxpayers' tax compliance.
        First of all, the current blockchain technology is not popular enough in the field of Taxation, lacking a certain breadth and depth. Taking blockchain electronic invoice as an example, from July 2019 to may 2020, Yunnan blockchain electronic invoice was promoted and applied to 2232 taxpayers in scenic spots, Kunming subway, Lijiang "Digital Town", Pu'er tea industry and retail, accommodation, transportation, catering and other industries; There are nearly 20000 registered enterprises of block chain electronic invoices in Shenzhen. Blockchain electronic invoices benefit people's livelihood, finance and other industries, but there are still deficiencies. How to deal with one or more trading parties that are not covered by blockchain technology? In a transaction, some enterprises use electronic invoices and some enterprises use blockchain electronic invoices. How do the two connect?.
        Such problems make taxpayers unable to enjoy convenient tax services, which still needs to be discussed at present. Secondly, after a long period of accumulation, taxpayers' tax habits have formed a fixed pattern, which is not easy to change. Blockchain technology is only emerging in the tax field. Taxpayers need a certain time cost and learning cost to accept new technology. Taxpayers are prone to psychological resistance, which will reduce tax compliance. The application of blockchain technology in the field of tax management is still being explored, especially the lack of professionals related to blockchain technology in the tax department, which affects the practical application effect of blockchain technology to a certain extent. On the one hand, the level of professional knowledge about blockchain of tax personnel is not high, on the other hand, the practical ability of tax personnel to apply blockchain is not strong, which is often prone to trial and error costs in practice.
        In order to provide better tax services, the tax department needs to carry out training for tax personnel or taxpayers. Whether it is the on-site training activities organized, or the technology research and development and promotion application of the tax service program platform, it will bring certain learning and application costs, which will reduce taxpayers' tax compliance.
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