Design and Evaluation of a Smart Contract-Based Value-Added Tax (VAT) Collection System on the Open Network (TON) Blockchain.
Value-Added Tax (VAT) administration remains vulnerable to underreporting, invoice fraud, and delayed remittance where collection depends on centralised records and periodic self-reporting. This study designed, implemented, and evaluated a smart contract-based VAT collection prototype on The Open Network (TON) blockchain. Design Science Research guided the development of a Tact smart contract, a TypeScript and Express application programming interface, a PostgreSQL database, and a Next.js interface. The compiled contract was deployed on TON testnet and evaluated empirically against explicit correctness, timing, fee, and evidence-integrity benchmarks through a controlled 30-case experiment (VAT-EXP-20260721) comprising 20 valid payments and 10 deliberate invalid cases. Functional tests, VAT accuracy, response time, confirmation time, transaction fees, output routing, and evidence integrity were assessed and independently verified against the finalised on-chain trace. All 20 valid payments succeeded, all 10 invalid cases were rejected, and the VAT calculation error was 0 kobo. Mean wallet signing and broadcast response time was 2.542 seconds, mean testnet confirmation time was 5.988 seconds, and the mean full-trace fee was 0.001728416 TON. All 21 automated backend and smart contract tests passed. The prototype demonstrates deterministic VAT arithmetic, automated split payment, replay protection, and verifiable testnet records for the evaluated cases. The experiment did not measure production throughput, mainnet behaviour, statutory validity, or privacy compliance.
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