One of South Korea’s largest banks released a tokenization pilot project to improve the Goods and Services Tax (GST) refund process for retail purchases.
NongHyup Bank, one of South Korea’s major commercial banks, signed a Memorandum of Understanding (MoU) with digital asset platform Fireblocks. The information appeared in the specialized media and was later confirmed by Fireblocks representatives.
The cooperation will focus on the creation of a service for tax refund tokenization. In particular, it’s planned to carry out refunds of the Goods and Services Tax (GST), which combines VAT and tax on the supply of goods and services.
In South Korea, the GST rate is 10%. However, a number of goods, including medical supplies and unprocessed food, are exempt from the tax. In addition, tourists are exempt from paying the tax in many cases. The GST refunds can range from 3% to 7% of the original cost of the goods, taking into account commission fees.
The tax refunds will be made through Fireblock’s Tokenization Engine platform and NH Bank’s financial infrastructure. Tokenization is expected to increase transparency and security of the refund process and reduce the associated transaction costs.
Lee Seok-yong, President of NH Bank, told The Block that the bank is committed to providing innovative blockchain-based services to its customers, and the cooperation with Fireblocks is an important step in this direction. Recently, representatives of UBS, one of the world’s largest banks, also emphasized that blockchain-based solutions are one of the strategic vectors of development for the bank.
