VATCoin: The GCC's Cryptotaxcurrency
24 Pages Posted: 13 Feb 2017
Date Written: August 31, 2016
Bitcoin is the world’s first peer-to-peer cryptocurrency. VATCoin is similar, but it is used in tax compliance. Both Bitcoin and VATCoin are distributive ledger applications built upon blockchain technology. Bitcoin’s ledger is public; VATCoin’s is private. If adopted, VATCoin could well become the world’s first government-mandated cryptotaxcurrency. Unlike Bitcoin, VATCoin will not be a speculative currency. It is always fixed to the home currency.
This paper proposes that the Gulf Cooperation Council (GCC) adopt VATCoin in its VAT Framework. The GCC is expected to have multiple 5% VATs in place by January 1, 2018. There is an ample amount of time to install a VATCoin regime. If VATCoin is adopted by the GCC as the exclusive currency for payment of VAT in the GCC, it will eclipse (by about five years) the 2016 World Economic Forum’s estimated timeline for the first use of blockchain technology in tax collection.
Furthermore, if VATCoin is implemented by the GCC in conjunction with a Digital Invoice Customs Exchange (DICE), the Gulf States will have one of the most fiscally efficient, technologically advanced, and fraud-proof VAT systems ever established.
With DICE a granular, transaction-level record of commercial activity is captured. With VATCoin no tax is paid or held in real currency; VAT is paid, remitted and collected only in VATCoin. Only the government can convert VATCoin to real currency, and aside from the treasury function they will do so only in a limited number of instances.
Keywords: Bitcoin, Blockchain, Cryptocurrency, Cryptotaxcurrency, VAT, Missing Trader Intra-Community Fraud, GCC, Gulf Cooperation Council, VATCoin, DICE, Digital Invoice Customs Exchange
JEL Classification: F10, K10, K14, K34, K39
Suggested Citation: Suggested Citation