Four ways in which Avatar Technologies, a parent company of Global Voice Group, can help governments improve tax collection and boost their development


6 October 2015

Insufficient tax collection has been pinpointed as an obstacle to socio-economic development in emerging and developing countries. These countries often lack the technological means that would allow their government to control and promote tax compliance efficiently.

Tanzania, for instance, has seen its finances undergo what the World Bank refers to as a “deep change” in recent years. The population growth, dwindling foreign aid and stagnant tax revenues are putting the country’s finances under pressure. The US$6 billion collected in taxes last year covered less than 75% of the government’s expenditure, which is not sufficient to allow the government to invest in the infrastructure required by the rapidly expanding population.

As a result, The World Bank strongly recommends that Tanzania revamp its tax system, with a view to improving tax collection. Tanzania’s new system should be “simpler and cheaper”, “fair” and “transparent”, as per the World Bank’s three pillars of reform. It should also appeal to the citizens’ sense of responsibility when it comes to tax compliance.

Electronic tools have proved to be the best way to achieve better control of taxation, provided they have been specifically adapted to the country’s actual environment. As one of the aforementioned tools, Avatar Technologies’ Electronic Fiscal Declaration (EFD) solution has the capacity to optimize tax collection and compliance in the retail sector of emerging and developing countries, by stabilizing and supporting the World Bank’s three pillars of reform.

  1. Avatar’s EFD solution is simple and affordable. For businesses, tax compliance may be as simple as adopting Avatar’s 5th-generation sales-recording devices, which are affordable, user-friendly and come with free access to a useful online accounting application. Taxpayers also have the possibility to keep their already-existing devices, as the latter can be seamlessly integrated into the solution. They can even use their smartphones as a sales-recording device with the Avatar android-based app.
  2. Avatar’s EFD solution promotes fairness. Currently, in Tanzania, close to 90% of the tax revenue is collected in Dar es Salaam. Avatar’s EFD solution can help broaden the tax base, as the sales-recording devices have a high level of autonomy, are resilient and allow for both remote audit and activation, which means that they can be used in businesses located in remote areas.
  3. Avatar’s EFD solution promotes transparency. The solution gives the authorities easy and total access to sales- and tax-related data, thus improving tax collection and reducing tax fraud.
  4. Furthermore, through its integrated Fiscal Lottery system, Avatar’s solution rewards the consumers who make a point of requesting their tax receipt after they have made a purchase. Avatar understands that it is crucial to involve the consumers, as they have the power to motivate traders to comply, simply by claiming their purchase receipt.

In the light of the above, it easy to see that Avatar’s EFD solution can effectively support the tax system of emerging and developing countries, as the World Bank conceives it. More than a mere tax management system, the solution will provide the government of these countries with an innovative financing mechanism enabling it to secure funds for development, while compensating for the dwindling flows of foreign aid. The combination of these advantages will certainly contribute to making these countries leaders in tax administration.

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