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

Author

Listed:
  • Hissu Hyvärinen

    (IT University of Copenhagen)

  • Marten Risius

    (Clemson University)

  • Gustav Friis

    (Brainbot Technologies AG)

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.

Suggested Citation

  • Hissu Hyvärinen & Marten Risius & Gustav Friis, 2017. "A Blockchain-Based Approach Towards Overcoming Financial Fraud in Public Sector Services," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 59(6), pages 441-456, December.
    • Handle: RePEc:spr:binfse:v:59:y:2017:i:6:d:10.1007_s12599-017-0502-4
    DOI: 10.1007/s12599-017-0502-4
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    References listed on IDEAS

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    1. Pilkington Marc, 2016. "Blockchain Technology: Principles and Applications," Post-Print halshs-01231205, HAL.
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    11. Wallbach, Sören, 2020. "Assimilation and Diffusion of Multi-Sided Platforms in Dynamic B2B Networks: Inhibiting Factors and Their Consequences," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 123277, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
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    13. Christian Bartelheimer & C. Ingo Berendes & Philipp zur Heiden & Daniel Beverungen, 2022. "Designing Digital Actor Engagement Platforms for Local High Streets: An Action Design Research Study," Working Papers Dissertations 101, Paderborn University, Faculty of Business Administration and Economics.
    14. Hugo Hoffmann Christian, 2021. "Blockchain Use Cases Revisited: Micro-Lending Solutions for Retail Banking and Financial Inclusion," Journal of Systems Science and Information, De Gruyter, vol. 9(1), pages 1-15, February.
    15. Pythagoras N. Petratos & Alessio Faccia, 2023. "Fake news, misinformation, disinformation and supply chain risks and disruptions: risk management and resilience using blockchain," Annals of Operations Research, Springer, vol. 327(2), pages 735-762, August.
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    17. Angélica Pigola & Priscila Rezende da Costa & Luísa Cagica Carvalho & Luciano Ferreira da Silva & Cláudia Terezinha Kniess & Emerson Antonio Maccari, 2021. "Artificial Intelligence-Driven Digital Technologies to the Implementation of the Sustainable Development Goals: A Perspective from Brazil and Portugal," Sustainability, MDPI, vol. 13(24), pages 1-28, December.
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    19. Sejung Park & Han Woo Park, 2020. "Diffusion of cryptocurrencies: web traffic and social network attributes as indicators of cryptocurrency performance," Quality & Quantity: International Journal of Methodology, Springer, vol. 54(1), pages 297-314, February.
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