Tax and Technology

S. 437Combatting VAT/GST Fraud through Blockchain Technology

Fabio Giusti

S. 4381. Introduction

The main purpose of this thesis is to analyse the potential use of blockchain for combatting value added tax (VAT) and goods & services tax (GST) fraud. The approach chosen for writing this thesis consists of first providing a proper explanation of the main elements, i.e., blockchain technology and VAT fraud. Following this, the advantages and disadvantages will be analysed through a practical overview of the implementation of this technology for reducing VAT loss across different states.

Initially, a brief overview of the common functions of blockchain will be presented to help readers understand the mechanism from an informatic point of view. The three different types of blockchains will also be explained so readers understand the current uses of this technology.

Secondly, the different kinds of VAT/GST fraud and their impact on the market will be explained to the reader. A special focus will be given to common VAT evasion by small business, misuse of VAT triangulation, and carousel fraud. Some examples will be used to explain the issues.

Thirdly, all the advantages and possible uses of blockchain for c...