We have solved one of the main problems of modern business, which almost everyone engaged in any activity faces. Namely, no one can understand why they have to pay taxes when they haven't received any revenue. Some even think this is done intentionally.
However, the problem lies elsewhere.
Technical AspectThe fact is that the modern tax system is derived from the current accounting system. The latter has two major flaws, which manifest as follows:
- The transfer of an asset to the buyer is recorded in accounting as the receipt of an asset from them.
- The receipt of an asset from suppliers is recorded in accounting as an expense.
Both of these actions are applied regardless of whether payments were made or not.
In the first case, tax liability increases, and in the second, it decreases. This tax liability is a derivative of the sum of the transferred assets. Ideally, it should be the opposite.
How did this happen?We solved this problem. In solving it, we found the answer to this question, which turned out to be quite simple.
Accounting was previously done manually, on wooden abacuses or with pen/pencil on ledger sheets. Therefore, simple rules and simple accounting entries were needed. These simplified accounting entries were used for hundreds of years and later transferred to computer programs.
In the age of computers, this problem is solved very easily. To solve the problem mentioned above, it is necessary to make up to a dozen entries for processing a single simple monetary transaction. Doing this manually is unthinkable. But with automation, it is easily accomplished. A computer doesn't care if it makes one entry or thousands; the main thing is to have the correct algorithm.
For this, the computer needs a special protocol: the Digital Accounting Protocol (DAP), which we developed in the process of creating our accounting software for optimal integration with AI tools. Without DAP, AI will never be able to correctly distribute entries according to the chart of accounts.
The TCP/IP protocol solved the problem of precise information transmission at the speed of light. Even from interplanetary spacecraft, we receive accurate photographs. The DAP protocol solves the problem of precise accounting. Accounting 2.0, which with 100% accuracy provides a picture of the financial state of an economic entity at any given time, "pixel" by "pixel," like digital photographs thanks to TCP/IP.
We have already implemented this in the code of our accounting software, Arvut AI Accounting, which can calculate using both the old and the new methods.
It is obvious that in the near future everyone will switch to Accounting 2.0. There can be no other way. Just as it is unthinkable now to revert to analog methods of information transmission, it will be unthinkable to revert to current accounting.