The Finance Ministry plans to adopt blockchain-based value-added tax (VAT) refund service for foreign tourists, starting from the end of this month.
The blockchain technology for VAT refunds should speed up the process for tourists as details of their purchases will be immediately shared with the Revenue Department and the Customs Department once shops key in the information in the system, according to Thailand’s Finance Minister.
This announcement was made after he signed a memorandum of understanding (MoU) along with Krungthai Bank, a state-owned bank under a license issued by the Ministry of Finance, to apply the technology in three pilot projects.
Foreign tourists will be able to claim VAT refunds via an application from 28 November 2019. They are required to identify the channel from which they want to receive the money-back, he said.
At least 2 million foreign tourists purchase goods and services in Thailand, amounting to 50 billion baht a year. An average of 200,000 tourists a month claim a VAT refund, 70% of whom are Chinese travellers who do not like to hold cash.
Blockchain technology can reduce the document verification process and the use of 10 million sheets of paper a year, lower cash management costs and slash congestion at VAT refund counters.
The blockchain-based VAT refund service can automatically approve such claims if the purchase amount is insignificant, said a source familiar with the issue, without specifying an amount.
The VAT refund for foreign tourists is one of three projects that have adopted blockchain technology. The others are scripless savings bond issuance and letters of credit (LC) for electronic procurement.
The Public Debt Management Office plans to allow people to download Bond Direct applications to purchase savings bonds, with values starting from one baht. The first savings bond issuance available through the app is scheduled to be sold in May 2020.
With blockchain technology, people can conveniently access savings bond subscriptions and shorten the scripless bond issuance process to two days from 15 days at present.
The process for blockchain-based LC issuance for state procurement will be streamlined to inspect collateral put up by bidders and build up confidence about collateral security.
The ministry is encouraging agencies under its direction to adopt blockchain technology.
Pushing Blockchain Tech Across All Operations and Processes
According to an article from August 2019, the Revenue Department and the Comptroller-General’s Department launched a pilot project using blockchain technology aimed at streamlining work processes.
The innovative technology also helps provide information associated with value-added tax and inspecting VAT refunds to reduce fraud, said the Finance Minister.
In the next stage, the Minister will work to connect data from three tax-collecting agencies – the Revenue Department, the Customs Department and the Excise Department – using blockchain technology to increase working and inspection efficiency.
The Customs Department is the second government agency in ASEAN to adopt a blockchain-based shipment tracking and information sharing platform to streamline procedures.
Blockchain technology will be a boon to the Finance Ministry, which handles a lot of data. The innovation will enable information to be shared across departments and with outsiders.
In addition, the Finance Ministry plans to harness big data to manage the information of the 14.6 million smartcard holders, including their debt. 29,763 recipients of the welfare scheme are indebted based on National Credit Bureau data.