Better, faster, cheaper: Most experts say any new process can only achieve two out of three of these goals.
Now a new system to handle tax forms in the EU promises to deliver all three benefits:
This new blockchain-based network can help any company that must deal with EU paperwork. And it can also help companies stop missing out on the benefits of free trade agreements with other countries.
Sponsored by Siemens and Henkel and developed by KrypC, the award-winning taXchain network is based on the Hyperledger Fabric framework for enterprise blockchains.
Everyone agrees that doing business in the EU creates a mountain of paperwork. Many forms deal with customs, duties, and taxes among the 27 EU members and with trading partners in other countries.
Filling out all these forms demands a lot of resources. And missed opportunities pile up when overloaded staff don’t claim the exemptions they’re entitled to under various trade treaties.
“Administration of tax matters is expensive,” says André Rubbert, Head of Digital Tax Transformation at Siemens AG in Munich. “This was really a huge problem for us.”
For example, he points to one of the simpler EU tax forms, the Long Term Supplier Declaration (LTSD). This form certifies the materials and country of origin for any product or material. Every form must be updated by every supplier every 24 months.
More than 80% of these forms are still handled on paper, creating a huge risk of honest mistakes and deliberate fraud.
Rubbert estimates that completing one LTSD form on paper costs €120 to €150. And every year Siemens exchanges about 10,000 of these forms with suppliers.
That means handling a single EU customs form on paper costs Siemens more than a million Euros a year.
Around 2018, Rubbert and his team started wondering about blockchain.
“We wanted to find out if blockchain technology could make these processes smoother, faster, more secure, and more transparent,” he says.
When they floated the idea to other companies, tax specialists, and universities, their colleagues at Henkel jumped in. The two companies agreed to work together and split the development costs.