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PHACKS | TAX

There are many concerns about tax. Several sectors and different government organisations seek to mitigate risks associated with different types of tax, nationally and internationally.  These risks and topics overlap.    

So far, some organisations have indicated that the following situations should be explored to identify potential collaborative requirements that the project could address: 

  • Confirmation that a tax return is valid, the amounts due and the amounts paid.  See also the gambling affordability requirements. 
  • Confirmation of whether any refunds are due and, if so, the amounts due to be refunded and paid. 
  • Prior to any payment being claimed or made, validating the details to ensure that the key attributes are correctly linked, so that an account number matches the account name and the account name is bound to the correct identity, and that the person accessing the account really is the person that they claim to be.  This is a core requirement for tackling Authorisation Push Payment Fraud (APPF). 
  • Where this involves a “legal person”, then the link or binding of the employee/person to the organisation is proved and the role is confirmed.  Official organisational roles (OOR) are defined in the international standard (ISO 5009). 
  • There may be additional requirements for tax-related attribute validation in cross-border situations. 
  • VAT frauds including acquisition fraud, carousel fraud, contra trading or missing trader intra-community (MTIC fraud). 
  • The NL government has responded positively to potentially using ZKP to validate user-claimed tax payments against the NL Tax Office in a privacy-preserving way. At that point, no government body would provide a document stating there was a regulatory need, so the NL offer is still sitting on the table. 

There are other types of fraud that may also be relevant, including: 

  • Underreported income 
  • False deductions 
  • False identity 
  • Failure to pay tax 
  • Submitting false tax returns 
  • Fraudulent investment claims 
  • Employee tax fraud 
  • Fake tax claims 
  • Tax evasion 
  • Hiding or transferring assets 
  • Smuggling 

Realising Value through PHACKS 

In addition to the above, different governments have expressed major concerns over five types of tax fraud:  

  • Fake tax rebate claims 
  • Cross-border foreigner tax fraud 
  • Customs & Excise tariff fraud 
  • Cross-border VAT fraud 
  • Foreign property/real estate ownership fraud 

As with banks and pensions, the tax-related requirements benefit from increasing regulatory compliance, AML, KYC and efforts to reduce financial crime.  However, the tax authorities also want to validate additional attributes in relation to organisations, supply chains and product types, batches, consignments and even individual items.  This particularly includes sensitive pricing information, upon which customs duties are calculated, right across the logistics chains.  FATF and OECD are also interested in this. 

Preparing for tomorrow, leading organisations want to achieve significantly greater cross-border privacy-preserving data validation in countering tax fraud.   As described above, PHACKS to support privacy-preserving data validation and collaborative anomaly detection in specific use cases and types of tax fraud 

How to Participate in PHACKS

If you are inerested in getting involved, please visit our How to Participate page or Contact Us. 

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