Smart economy : A blockchain solution - automation of Austrian tax system

Abstract

Blockchain and smart contracts are rising technologies in modern computer science. This enables a new type of application where financial products and services can be implemented as executable code. Accounting is an activity with still a lot of manual work which is necessary to calculate profit and further tax values. Bills are forwarded to the accountant who fed complex accounting software with the bill data and report back the payable tax amount. This leads us to the research question of this thesis, creating a decentralized application to automate tax systems like in Austria to demonstrate the possibilities of such systems. The system automates the manual processes of tax accounting and the transaction of the tax amount to the tax office. The thesis starts with theoretical research about blockchain systems and economic models, followed by the creation of a simple model of economic interactions necessary for tax calculations. Subsequently, the smart contract is implemented with the Solidity smart contract programming language on the Ethereum blockchain. Furthermore, this contracted is implemented on a web-based decentralized app to grant users access to the system. The smart contract is published on Etherscan and the decentralized app is accessible via MetaMask on kovan network. Metamask is a browser extension to connect an Ethereum wallet to a website based app and interact with smart contract functions. The thesis demonstrates how tax law can be implemented within a smart contract programming language. It includes implementations of income tax, VAT, social insurance, insurance tax, corporate tax, wage tax and local tax according to Austrian tax law.