A Blockchain-Based Approach for Secure and Transparent e-Faktur Issuance in Indonesia's VAT Reporting System

TL;DR

This paper proposes a blockchain-based e-Faktur system for Indonesia's VAT reporting, enhancing security, transparency, and resilience against cyberattacks by leveraging Hyperledger Fabric and FireFly.

Contribution

It introduces a novel blockchain architecture for tax invoice issuance and verification, addressing security and decentralization challenges in Indonesia's tax system.

Findings

Blockchain improves data immutability and auditability.

System reduces reliance on centralized servers.

Enhanced robustness against cyberattacks.

Abstract

The implementation of blockchain technology in tax administration offers promising improvements in security, transparency, and efficiency. This paper presents the design of a blockchain-based e-Faktur system aimed at addressing the challenges of issuing and verifying tax invoices within Indonesia's VAT reporting process. Utilizing Hyperledger Fabric, a private permissioned blockchain, integrated with Hyperledger FireFly, this system ensures data immutability, access control, and decentralized transaction processing. The proposed system streamlines the issuance of NSFP and validates invoices while reducing reliance on centralized servers, eliminating single points of failure, and enhancing auditability. Hypothetical cyberattack scenarios were explored to assess the system's robustness. The results demonstrate that blockchain technology mitigates potential vulnerabilities and improves the resilience of tax reporting systems. The findings highlight the feasibility of blockchain in public tax administration and provide a foundation for future research on large-scale implementations.