- The German government is reportedly considering using blockchain in combating tax evasion
- This comes following the reveal of the CumEx files, which cost the government $63 Billion in lost tax revenue
A while ago, it was reported that Bangkok would be making use of blockchain technology to combat tax evasion. It now seems that Germany is following their lead as the Federal Ministry for Economic Affairs and Energy (BMWi) will be using blockchain as well to fight tax evasion.
This comes after The CumEx files came to light. The CumEx files was a scheme involving top attorneys, banks and stock traders to obtain funds from European treasuries. This was done through speculation of dividend tax.
It is believed that Germany took the biggest hit as a result, with their economy losing $63 Billion
As such, it is easy to see why the government would be quick to embrace Blockchain for tax purposes to prevent anything like that happening again.
Tamper proof and transparent
Blockchain has the significant advantage that all transitions that take place through it at recorded in an irrefutable ledger and also because the records are tamper-proof. This proves very beneficial in the recording of financial information, including taxes.
Christian Hirte, The head of the Federal Ministry for Economic Affairs and Energy (BMWi), stated that the use of blockchain would make tax transactions “certainly traceable” at any time.
Various governments are deploying blockchain for the issuance of drivers’ licenses, passports and so on. This goes the show just how diverse the use of blockchain technology is beyond creating cryptocurrencies.
One of the biggest reasons for this is that blockchain technology has few to no loopholes that can be exploited. This makes it appealing to a country like Germany that has stated that it lost $5 Billion through the exploitation of tax loopholes before 2012.
Building blocks of the future
Of all the various applications of blockchain that have been adopted in event years, financial transaction recordings are one of the most prominent.
With the widespread use of blockchain, however, we could very well be looking at a future where large-scale financial fraud is greatly reduced, if not eliminated altogether.
This has served as a launch vehicle for blockchain, gaining attention from world powers that might not have considered it before. And if Germany is any indicator, this isn’t stopping any time soon.