Fapiaos can benefit greatly from the rising use blockchain technology in China, it’s safe to say that it’s on the way to mass adoption.

President Xi Jinping’s praise of the technology has increased the overall interest from the population. One of the biggest uses for the tech in China is that blockchain’s ability to combat corruption. In China’s particular situation, blockchain tech will come incredibly handy when it comes to the embezzlement of state and corporate funds. A very serious problem which the country has spent many years trying to solve to no avail.

This can be seen most clearly in the relatively unknown and very complex Chinese “Fapiao” system. A simple explanation would be that it revolves around the concept of the Chinese word for an “official” voice – “fapiaos”. It’s a receipt which is regarded as a proof of purchasing goods and services.

They are usually issued by the Chinese Tax Bureau, but are provided by the seller. Their use is for intended for the usage of any service, but only within the country. Fapiaos are also used to track tax payments and detect tax evasion. People require them to claim business expenses and companies and required to record all of their transactions on them by law.

Now the system is very old and it’s completely natural it has flaws that can be exploited. It was established back in the 80’s and an article by New York times points out it’s many uses in the underground. It’s noted how fapiaos are sold on the streets and some of them are even cheap imitations. Their most frequent use is tax evasion or the occasional cheating of the hated employer. Regardless of the intentions, they are fairly simple to acquire and there are even websites on which you can order them with special discounts. The delivery is even said to come in 1-2 workdays.

Fapiaos are an easy way for some agencies to “save” money

Ordinary tax payers are not the only ones who make use of the system. It’s been noted that many state agencies are finding ways to exploit the holes in the system. It’s quite concerning when the amount of abuse is so high, especially with the severity of a crime such as tax evasion, it’s sometimes punishable by death. There are reports that fapiaos are sold frequently even in hotel gift shops.

Such a rampant scale of misuse may finally see a decline when blockchain technology sees mass adoption. Ironically enough, conservative Chinese politicians have said multiple times that cryptocurrencies are a Ponzi scheme and a gateway to money laundering and corruption. Now they resort to the very same technology’s decentralized and encrypted ledger to help in the very fight against corruption, which made most of them rich in the first place. The ability to record all transactions with an exact time and place, will solve the problem with fapiaos almost entirely.

The prospect of blockchain assisting in the fight against fapiao misuse was initialized after the Shenznen National Taxation Bureao teamed up with the internet giant Tencent. Together they designed an “intelligent tax” innovation lab. Earlier this month it was announced by EEO that the very first digital invoice was issued in Shenzhen.

The pilot blockchain ecosystem of invoices was designed by Tencent and allows for usage from customers, merchants and tax authorities. The first user of the system was a local restaurant while many other businesses have been granted access to the system thereafter. The system requires minimal interaction from the customer as it requires a simple click in the WeChat app during the checkout.

This simple process eliminates all risk of forgery and can in theory solve a 30-year old Chinese corruption problem in less than 1 year. However, since this is a relatively new concept mass adoption will take time and the Chinese government needs to put serious effort into popularizing and adopting the technology.

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