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Blockchain to Help Prevent Tax Frauds in Germany

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The German Federal Ministry for Economic Affairs and Energy (BMWi) is planning to use Blockchain technology to help prevent tax evasion, German business outlet WirtschaftsWoche reported on November 22.

The move comes after a major European tax fraud scheme, the CumEx-Files came to light. Reportedly, the CumEx-Files was a scheme initiated in 2017, consisting of a network of banks, stock traders and top lawyers which obtained billions from the European treasuries through fraud and speculation with dividend tax. As a result of this, Germany has been hit the hardest, with a loss of about $63 billion.

Christian Hirte, the Parliamentary State Secretary at the BMWi, has stated that the use of Blockchain technology "could ensure" that tax shares are "certainly traceable" at "any time".

Consequently, the BMWi is confident that distributed ledger technology (DLT) is the solution to this menace and will help to make the tax system more efficient in terms of fraud prevention.
All the transitions that would take place through DLT are recorded in a tamper-proof ledger. This feature is very beneficial in the recording of financial information, including taxes.
Christian Hirte, the Parliamentary State Secretary at the BMWi, has stated that the use of Blockchain technology "could ensure" that tax shares are "certainly traceable" at "any time".

Infact, apart from the primary use of Blockchain for creating cryptocurrencies, various countries are deploying the same for the issuance of drivers' licenses, passports, and other vital documents.
While it is easy for hackers to break into traditional networks, find all the data in a single repository and exfiltrate it or corrupt it, the use of Blockchain technology makes such activities quite hard. The data is decentralized, encrypted and cross-checked by the whole network; and once a record is on the ledger, it is a Herculean task to alter or remove it without being noticed and invalidating the signature. Thus, as every legitimate transaction is confirmed by multiple nodes on the network, a hacker would need to hack most of the nodes simultaneously, which is way beyond the capability of any cybercriminal today.

The Thai Revenue Department has revealed plans to track tax payments using DLT and machine learning.

This few to no loopholes advantage is what makes it appealing for a country like Germany that has stated that it lost over $5 billion through the exploitation of tax loopholes before 2012.
Also, the Thai Revenue Department has revealed plans to track tax payments using DLT and machine learning, for the very same purpose as Germany's and to accelerate the tax refund process.
Sure enough, Blockchain technology has evolved and it's deployment will be an added advantage to secure transactions for any nation.

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