Oct 07, 2016
Russia’s Tax Service to Use Blockchain to Get Rid of Tax Statements

Russia’s Federal Tax Service (FTS) has stated its intent to use blockchain technology in getting away from statement-based mechanism of working with companies. FTS believes it would significantly simplify the exchange of documents and render an enormous accountancy staff unnecessary along with increasing the system’s overall efficiency.
According to Russian publication Izvestiya, Daniel Yegorov, the Deputy Head of the FTS said:

According to Russian publication Izvestiya, Daniel Yegorov, the Deputy Head of the FTS said:

“Taxpayers strike deals, have their operations, execute relevant documents, put it all in their computers, post it, use analytics and then synthetics, then it ends up in their tax returns, then they give it to us, and we start unwrapping it all again.”

Yegorov noted that using blockchain technology would become the next strategic move after introducing online cashier’s offices to be launched in 2018. The technology would allow the entity to create a distributed storage system featuring user identification and secured access.

FTS also believes that eventually they will be able to audit data on the user’s side.

“If we end up using this kind of model, the tax service will balance the data itself, with the taxpayer just confirming it. It’s a breakthrough in terms of development of supervision,” Yegorov added.

The Russian Central Bank’s press office, meanwhile, noted that blockchain technology is not banned by Russian laws, and using it or not is up to local companies and entities.

Earlier this week, Russia’s biggest banks have successfully run test transactions using an Ethereum-based blockchain service, which is set to provide them with timely information and to check user data validity. The concept dubbed “masterchain” was supervised by Russia’s financial regulator, the Bank of Russia. It involves Alpha Bank, Otkrytie Bank, Tinkoff Bank, and QIWI.

Russia’s FTS has no intent to abandon tax statements or implement blockchain technology in revenue accounting of companies according to the statement provided by the FTS’s press office to TASS.

The FTS has clarified that Daniel Yegorov did not talk about using any particular technology, including blockchain, in tax administering, and did not claim that tax statements were to be abandoned in the short run. This way of tax supervision development may become one of possible ways of development with the IT in the long term.

“However, Russia’s FTS notes that block chain technology is not an alternative for submission of statements. The service currently studies the technology, however, it should be clear that using blockchain in government entities is only possible once particular software solutions are included in the ledger of Russian software of Russia’s ministry of communications, the FSB or FSTEK,” the spokesperson for the FTS stressed.

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