Read the full case study here.
Everyone agrees that doing business in the EU creates a mountain of paperwork. Many forms deal with customs, duties, and taxes across 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.
Take, as an example, the Long Term Supplier Declaration (LTSD), which certifies the materials and country of origin for any product or material. This 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.
Every year, Siemens AG exchanges about 10,000 of these forms with suppliers at an estimated cost of €120 to €150 for completing each paper-based LTSD form. That means handling a single EU customs form on paper costs Siemens more than a million Euros a year.
The Digital Tax Transformation at Siemens teamed up with colleagues at Henkel to see if they could use blockchain technology to make the processes smoother, faster, more secure, and more transparent. Their aim was to
- Prove that digitized tax forms save time and money
- Build an open, flexible platform that can support many partners
- Showcase the network to companies across the EU
They opted for Hyperledger Fabric as the platform because it is built for permissioned networks, with good security and privacy, and strong community support. It took a team of Microsoft developers in Europe just three days to build a working prototype that could handle an LTSD form on-screen instead of on paper. Right away, the benefits were obvious. Before, the complicated paper-bound process took days, if not weeks. Now, thanks to pull-down lists and tax codes, the LTSD forms never need to be printed. If both buyer and seller use the new system, a whole form can be done in minutes, with far less risk of errors or fraud.
To build out the full blockchain network, Microsoft recommended KrypC, an experienced solution provider that was already operating several other networks built with Hyperledger Fabric. KrpyC built taXchain, a very flexible network where any member can run their own node or use a managed node; write their own APIs or have those written for them; and process a small, medium, or large number of tax forms.
The LTSD form is now running on the network, linked to a database of 7,000 possible materials. APIs link the network to an SAP pilot system at Siemens. The blockchain stands ready to record and certify precise data based on each LTSD, in a tamper-proof format that government authorities and trading partners can trust.
In a huge vote of confidence for its innovative design, taXchain recently won the prestigious Taxcellence award from Handelsblatt, a renowned financial newspaper in Germany.
The Hyperledger Foundation team worked with KrypC and Siemens on a case study that details the planning and development of taXchain as well as next steps for growing the network. It also highlights the long-term opportunity to transform the traditional chore of processing B2B taxes from a cost center to a profit center.
Read the full case study here.