A Blockchain-Based Approach Towards Overcoming Financial Fraud in Public Sector Services

Hissu Hyvärinen (), Marten Risius () and Gustav Friis ()
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Hissu Hyvärinen: IT University of Copenhagen
Marten Risius: Clemson University
Gustav Friis: Brainbot Technologies AG

Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, 2017, vol. 59, issue 6, No 5, 456 pages

Abstract: Abstract In financial markets it is common for companies and individuals to invest into foreign companies. To avoid the double taxation of investors on dividend payment – both in the country where the profit is generated as well as the country of residence – most governments have entered into bilateral double taxation treaties, whereby investors can claim a tax refund in the country where the profit is generated. Due to easily forgeable documents and insufficient international exchange of information between tax authorities, investors illegitimately apply for these tax returns causing an estimated damage of 1.8 billion USD, for example, in Denmark alone. This paper assesses the potential of a blockchain database to provide a feasible solution for overcoming this problem against the backdrop of recent advances in the public sector and the unique set of blockchain capacities. Towards this end, we develop and evaluate a blockchain-based prototype system aimed at eliminating this type of tax fraud and increasing transparency regarding the flow of dividends. While the prototype is based on the specific context of the Danish tax authority, we discuss how it can be generalized for tracking international and interorganizational transactions.

Keywords: Blockchain; Public services sector; Taxation; Double spending; Double taxation treaties; Design science (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (22)

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DOI: 10.1007/s12599-017-0502-4

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