Efficiency requirements for EFDs
26 June 2015
Avatar’s solution ticks all the boxes
Taxation control is a worldwide issue, but an especially critical one for emerging and developing countries, where tax revenues only represent 10% to 14% of the GDP. These figures are much lower than the 20% recommended by the OECD to allow these countries to meet their development goals.
Experience has shown that tax authorities that had ditched the paper-based administration for electronic sales recording methods had dramatically enhanced their visibility over the tax-related data and were able to counter tax fraud more efficiently. As a result, electronic fiscal solutions, and more specifically Electronic Fiscal Devices (EFDs) are now the talk of the town, as an increasing number of countries show interest in their implementation.
However, a recent working paper by Peter Casey and Patricio Castro concerning the impact of EFDs on taxpayer compliance and administration efficiency and published by the International Monetary Fund (IMF) concludes that “the implementation of EFDs can only be effective if it is a part of a comprehensive compliance improvement strategy that clearly identifies risks for the different segments of taxpayers and envisages implementing a set of measures to mitigate these risks”.
A “comprehensive compliance improvement strategy” is exactly what the EFD solution developed by Avatar Technologies Ltd offers. The solution was designed to create a tax compliance-enabling environment in all areas of the retail sector, to the benefit of the governments, the taxpayers and the consumers, involving all three groups of stakeholders into the compliance process.
Through Avatar’s EFD solution, tax authorities get more than just sales-recording devices. Yes, the latest generation of EFDs, Avatar G4 or G5, are set up at points of sale in order to record transactional data. But these EFDs also feed a highly secure, Cloud-based tax data ecosystem, the Avatar Fiscal Cloud, which forms the core of the solution and is controlled by the regulatory authority. This allows the latter to access, in real time, the data it needs in order to accurately determine the revenue it is owed from the retail sector and to curb tax fraud.
Avatar’s solution also wins over the taxpayers by making compliance easy, affordable and rewarding for them. They benefit from 24/7 in-country customer support and can retain already-existing devices, provided they have them certified. Avatar also provides them with free access to several value-added services, such as AvatarBooksTM. AvatarBooksTM is a fiscally compliant, highly secure and user-friendly Cloud-based application that allows for efficient accounting and tax management.
As far as the consumers are concerned, they are brought within the compliance circle through an incentive program, in the form of a Fiscal Lottery. Avatar understands that it is crucial to involve the consumers, as they have the power to force compliance on the traders simply by claiming their purchase receipt. The lottery ticket number automatically appears on every receipt printed using an Avatar G4 or G5 device.
Avatar’s EFD solution thus addresses the main concern raised by Casey and Castro’s study, which is that EFDs are only effective if they are used as part of comprehensive tax compliance improvement strategy. Not only that, it also shows that tax compliance can be cost-effective, hassle-free and rewarding for all the stakeholders.
Read the whole paper: http://www.imf.org/external/pubs/cat/longres.aspx?sk=42820.0