Shenzhen has become the pilot city for launching blockchain electronic invoices or fapiao nationwide. The new system which uses China’s “everything app” WeChat was created by Tencent, the Shenzhen Water Authority, and the software company Kingdee.

A fapiao is a legal receipt that serves as proof of purchase for goods and services. The larger fapiao invoice system, however, is an essential component of China’s tax law, and compliance for businesses, according to Dezan Shira and Associates law firm. Employees frequently submit invoices to their companies to get reimbursements.

As with most things related to tax, the fapiao system is regularly exploited. Tax invoices can be purchased on the black market with advertisements frequently appearing in text messages and stickers in public areas.

The launch of the new invoicing system was announced by Tencent on August 10. Unlike the overly complicated process of sending physical fapiaos to be approved which frequently involves special forms, Excel tabs, delivery services and glue, electronic invoices can now be issued directly through WeChat.

China’s government is harnessing its data to make blockchain-based identity a reality

After payment, users can apply to receive a virtual fapiao and place them in their “Card Bag” (卡包) from which they can choose to submit the invoice for reimbursement. Invoice information will be synchronized in real-time at the enterprise and the tax bureau.

According to Tencent, the blockchain is there to ensure that each invoice can be traced back, information cannot be tampered with, and data cannot be lost. The whole process can be monitored in real time.

This is not the first blockchain-based electronic invoice system in China. In June, a system called “Tax Chain” (税链, our translation) was launched by the Huangpu district of the Guangzhou Development Zone with Guangzhou Gas Group.

The Chinese government has been exploring other applications for blockchain including intellectual property protection, supervision of ex-prisoners, and ID systems for public healthcare.

Masha Borak is a technology reporter based in Beijing. Write to her at masha.borak [at] Pitches with the word "disruptive" will be ignored. Read a good book - learn some more adjectives.

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