Paper 2024/1576
Verifiable Value Added Tax
Abstract
Value Added Tax (VAT) is a cornerstone of government rev- enue systems worldwide, yet its self-reported nature has historically been vulnerable to fraud. While transaction-level reporting requirements may tackle fraud, they raise concerns regarding data security and overreliance on tax authorities as fully trusted intermediaries. To address these issues, we propose Verifiable VAT, a protocol that enables confidential and verifiable VAT reporting. Our system allows companies to confidentially report VAT as a homomorphic commitment in a centrally managed permissioned ledger, using zero-knowledge proofs to provide integrity guarantees. We demonstrate that the scheme strictly limits the amount of fraud possible due to misreporting. Additionally, we introduce a scheme so companies can (dis)prove exchange of VAT with fraudulent companies. The proposed protocol is flexible with regards to real-world jurisdictions’ requirements, and underscores the potential of cryptographic methods to enhance the integrity and confidentiality of tax systems.
Metadata
- Available format(s)
-
PDF
- Category
- Applications
- Publication info
- Preprint.
- Keywords
- TaxZero-Knowledge ProofsIVCAccumulators
- Contact author(s)
- victor @ provable com
- History
- 2024-10-08: approved
- 2024-10-06: received
- See all versions
- Short URL
- https://ia.cr/2024/1576
- License
-
CC BY
BibTeX
@misc{cryptoeprint:2024/1576,
author = {Victor Sint Nicolaas and Sascha Jafari},
title = {Verifiable Value Added Tax},
howpublished = {Cryptology {ePrint} Archive, Paper 2024/1576},
year = {2024},
url = {https://eprint.iacr.org/2024/1576}
}