China has issued its first blockchain-based tax invoice in the southern city of Guangzhou, as part of an effort to stamp out fraud and increase the ease of reimbursements.

The initiative was launched in Huangpu district of the Guangzhou Development Zone, with Guangzhou Gas Group Co. issuing the first tax invoice of its kind. The documents, known as fapiao (发票), are used by businesses and individuals alike for the purpose of tax deductions and reimbursements. However, the system is often exploited, and a black market for these official documents has emerged.

The Southern Daily reports that “Tax Chain” (税链, our translation) will provide an alternative in which data cannot be modified, and its safety can be guaranteed.

“Blockchain data can’t be tampered with, ensuring the authenticity and integrity of invoice data,” Xu Zhengjun, chairman of Foresee Technologies, the company that operates Tax Chain, is quoted as saying. He added that the distributed nature of blockchain would ensure data can never be lost.

Xu also mentioned the system would be able to keep taxpayers’ identities safe, minimize the risk of data breaches, and ensure personal data is not illegally used.

While tax invoice applications have become more convenient through the use of apps like WeChat and Alipay, this is the first time the country is combining the government-mandated invoices with the immutability of blockchain.

The government has been pushing the adoption and development of blockchain and its related applications. In April, a government-led venture capital fund focusing on blockchain was launched in Shenzhen, known as the Silicon Valley of hardware in China. One month prior, a research institution in the country’s central bank, announced the Blockchain Registry Open Platform (BROP) which is aimed at developing intellectual property rights.

In December 2016, it was included as a strategic technology in the country’s 13th Five-Year Plan. In line with this, officials have been working on a set of national standards, which will include requirements for interoperability, safety, and reliability.

Christopher Udemans is TechNode's former Shanghai-based data and graphics reporter. He covered Chinese artificial intelligence, mobility, cleantech, and cybersecurity.

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