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One of the largest banks in South Korea has initiated a tokenization pilot project aimed at enhancing the Goods and Services Tax (GST) refund process for retail transactions.
NongHyup Bank, a prominent commercial bank in South Korea, has entered into a Memorandum of Understanding (MoU) with the digital asset platform Fireblocks. This information was reported by specialized media and subsequently confirmed by representatives from Fireblocks.
The partnership will concentrate on developing a service for the tokenization of tax refunds. Specifically, it aims to facilitate refunds of the Goods and Services Tax (GST), which encompasses VAT and taxes on the supply of goods and services.
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In South Korea, the GST is set at 10%. However, certain items, such as medical supplies and unprocessed food, are exempt from this tax. Additionally, tourists are often not required to pay this tax in various situations. The GST refunds can vary from 3% to 7% of the original price of the goods, factoring in commission fees.
The tax refunds will be processed through Fireblock’s Tokenization Engine platform alongside NH Bank’s financial infrastructure. The implementation of tokenization is anticipated to enhance the transparency and security of the refund process while lowering the related transaction costs.
Lee Seok-yong, President of NH Bank, stated to The Block that the bank is dedicated to offering innovative blockchain-based services to its clients, and the collaboration with Fireblocks represents a significant advancement in this endeavor. Recently, officials from UBS, one of the largest banks globally, also highlighted that blockchain-based solutions are a key strategic focus for the bank.
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