A hybrid blockchain proposal to improve value added tax recovery

In the present article, the authors propose a novel hybrid blockchain approach to improve VAT recovery, meeting privacy requirements as introduced by the European General Data Protection Regulation. This will provide real improvement to prevent tax fraud as it will not be possible to hide cash transactions. To limit the amount of energy spent, the idea proposed in this paper is to introduce an authority with a limited action. Moreover, the authors address privacy requirements by providing two cumulative possibilities: (1) separate privacy related and other information; and (2) introduce blockchains pointers to ensure the integrity of the blockchain. Lastly, the paper underlines how government administrations are able to take advantage of the proposed new approach to struggle against illicit transactions.