Rwanda: Electronic Billing Machines – a Boon, Not a Burden
10 June 2013
Recently, Rwanda Revenue Authority (RRA) introduced the Electronic Billing Machine (EBM), a mechanism that benefits both the tax payer and collector. However, within the business community not everyone has yet understood the advantages of the system, and those skeptical entrepreneurs therefore look at it with a wary eye. That should not be the case, because they themselves stand to gain from it and using the EBM is the best way to manage their daily business transactions. An Electronic Billing Machine is a portable device the size of a smart phone. It comprises of two components, a Sales Data Controller (SDC) and a Certified Invoicing System (CIS). The SDC is the data storing component of the EBM which can be external or inbuilt, and it is controlled by the CIS software.
The SDC records every transaction received from the CIS, and then ensures that an electronic signature is printed on the receipt. This signature is specific to every tax payer so that it can’t be forged; it is verifiable by RRA officers using a special decryption tool unique to every installed SDC device, so any attempt to falsify the signature can be immediately detected. For every transaction done at a point of sale, the details are stored in the SDC and simultaneously transmitted to the RRA database. The SDC can store data for up to ten years.
About five hundred tax payers have been given these machines under a special arrangement by RRA to work as a pilot project before a full roll out of similar machines is allowed countrywide. However, RRA warns other members of the business community who already have the machines to ensure they are compatible with the Authority’s own system.
RRA says they are currently screening possible agencies that will be certified as suppliers of the devices that comply with the proper standards and other requirements. An official in the compliance department of RRA says that they are aware that many businesses are not paying their full taxes and to prove that fact auditors spend countless hours going over massive documentation which causes disruption in operations of both honest taxpayers and those who evade tax on purpose. That thanks to this affordable technology, VAT paid by the citizens and businesses will be instantly recorded and the audit itself will become much simpler.
RRA adds that the EBMs will also provide a market balance and make equal business opportunities for every entrepreneur in a sense that it promotes transparency in book-keeping. This is because, when taxpayer A withholds taxes he’s supposed to remit to RRA, he unfairly makes more profits than taxpayer B who chooses to operate honestly. In practice, VAT doesn’t belong to the business, for it has already been added onto the product for sale and is paid by the consumers. To calculate the final price of a commodity, several factors are considered including VAT and therefore, RRA is simply helping the tax payer to separate what belongs to him and what to the treasury.
“Our ambition to increase the budget benefits all citizens who will eventually enjoy better social programs, and the money for that will be coming from your VAT,” observes Drocella Mukashyaka, director of tax payers’ services at RRA.
RRA says they are awaiting a Ministerial Order which will give the use of EBMs a legal foundation before its use can be fully enforced. This will mean that anyone who fails to acquire and properly use the device in the future will be breaking the law which is punishable with a heavy fine.
Private sector on board
The Private Sector Federation (PSF) is a major stakeholder in the successful implementation of RRA’s taxpayer innovations including the EBM. PSF, which is the umbrella of the country’s private sector operators, clearly understands its responsibilities and has fully embraced it to help in promoting awareness on the use of the EBMs.
In April, the ICT chamber of PSF partnering with RRA held a half-day workshop for its members to create awareness on the requirements for certification of suppliers of these devices.
“Our ambition to increase the budget benefits all citizens who will eventually enjoy better social programs, and the money for that will be coming from your VAT.”
According to Alex Ntare, the director of the ICT Chamber, the aim was to put the chamber’s members on the same page with RRA to ensure that they benefit from the business opportunity presented by the new requirement.
The chamber has three main associations: software developers, young ICT entrepreneurs and IT equipment dealers, who will naturally be among those to apply for certification to officially supply the required devises.
“It’s vital to prepare our members to be aware of the certification requirements set by RRA before the general roll-out starts,” Ntare said.
According to Clare Uwera, an official with PSF’s Chamber of Commerce and Services, they have six associations including the association of whole-sellers and retailers that include shops and supermarkets who are of course most concerned by the introduction of the EBMs.
Though the association doesn’t have the exact number of operators in its sector, RRA has a detailed list of VAT taxpayers registered across the country and these will be required to acquire the new EBMs. ICT chamber’s Ntare says they are going to partner with the Commerce and Services Chamber to ensure they promote the use of the new devises in order to help both RRA and private business owners to carry on their activities. According to Uwera, her chamber is also working out a strategy of promoting the innovation in order to ensure members don’t fall foul of the law. Tax issues have always topped the list of problems facing members of the Chamber mostly due to poor bookkeeping which causes problems with their tax declaration. The EBMs will bring them much relief.
Source: Rwanda Focus (Kigali)