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Author: rodelin

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Tax. It’s a lottery.

 

Tax. It’s a lottery.

 

12 February 2014

Could a sales receipt be a winning ‘lottery’ ticket? Portugal is the latest of a number of countries intending to use tax refunds, lotteries or fines to encourage consumers to report payments they’ve made to retailers.
 
In what has been dubbed a ‘luxury receipt’ sweepstake, Portugal intends to combat tax fraud by offering cars as lottery prizes to customers who demand receipts for their purchases. The idea being that, by customers submitting sales receipts with their individual personal tax/social security number to the tax authorities, this would dissuade businesses from under-declaring VAT on cash sales. While one would suspect that ‘bargain hunter’ consumers might negotiate a hefty discount for forgoing a receipt, thereby colluding in the ‘black market’, studies in other countries have shown quite the reverse.
 
Sao Paulo in Brazil introduced a similar scheme in 2007 whereby customers provide their social security numbers to cashiers, and the businesses must submit their copies of the receipts to the tax authorities. The tax authorities then report which social security numbers have been entered, with customers receiving a 30% rebate of VAT paid to the business, and entered into a lottery with a potential $500,000 pay out.
 
According to a study undertaken by Harvard economist Joana Naritomi, thirteen million people entered into the receipts database in 2011, with one million complaints from customers that their receipts hadn’t been recorded. The result? Over four years, reported revenues increased by 22%, with an increase in VAT payments of over $2 billion. While ‘rewards’ to customers accounted for $1.6 billion of those increased revenues, it still resulted in a very creditable’ $400 million net increase to the regional government.
 
According to the Institute for Economic Affairs, the UK’s black market accounts for about 10% of the economy, or more than £150bn a year, yet HMRC’s tax ‘campaigns’ over the last four years have only netted £802 million. Maybe we should run a lottery?
 
 
Source: BDaily Business News

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Help Improve Fragile Tax Systems, OECD Tells Donors

 

Help Improve Fragile Tax Systems, OECD Tells Donors

 

12 February 2014

The Organization for Economic Cooperation and Development (OECD) has accused international donors of failing to do enough to help “fragile” states increase their domestic revenue. A new OECD report, “Fragile States 2014: Domestic Revenue Mobilization,” claims that a mere 0.07 percent of official development assistance (ODA) to such countries is directed toward building accountable tax systems. The OECD’s list of fragile states includes the Central African Republic, Haiti, North Korea, and South Sudan; while Egypt, Libya, and Mali have been added so far this year.
 
This group of 51 countries on average collects less than 14 percent of its gross domestic product in taxes. Afghanistan, Ethiopia, and Pakistan have tax collection rates below 10 percent of GDP. The level considered necessary for meeting poverty goals stands at a far higher 20 percent. The amount of international aid allocated to efforts for improving vulnerable tax systems is deemed “near to negligible” when compared with the 18 percent of ODA that goes toward economic infrastructure, the 12 percent spent on health, and the 7 percent on education. “Just a few hundred thousand dollars” of this money is spent on domestic revenue mobilization in Ethiopia, South Sudan, and Côte d’Ivoire.
 
The report should offer “a wake-up call for development cooperation providers,” according to its foreword. Donors ought to encourage states to broaden their tax base, by focusing on direct taxation, and design frameworks to better manage natural resource revenues. The transparency and governance of tax incentives should be improved, and donors are urged to help boost tax morale, by “strengthening the link between revenue collection and responsible expenditure management.”
 
The OECD will launch a related “Tax Inspectors Without Borders” initiative later this year, to help poor countries combat tax evasion.
 
 
Source: Tax News

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Belgium To Phase In Tax Cash Register System In 2015

 

Belgium To Phase In Tax Cash Register System In 2015

 

12 February 2014

The Belgian Finance Ministry has published the key dates for the phased implementation of the tax cash register system (SCE) in the hotel and catering industry (Horeca) in Belgium in 2015. The tax cash register system becomes mandatory for all hotel and catering establishments from January 1, 2015.
 
Employers opting to install the SCE system this year, on a voluntary basis, will benefit from a reduction in employers’ contributions for five full-time workers, as well as from a rise in the number of overtime hours qualifying for tax reductions, from 130 to 180 hours.
 
For all other establishments, Finance Minister Koen Geens intends to allow an “implementation period” of up to one year, during which time employers will not be sanctioned for not using the tax cash register system. This implementation or “administrative tolerance” period ends on January 1, 2016.
 
The one-year transitional period is designed not only to help employers in the Horeca industry adjust to the changes, but also to enable the new Belgian Government to evaluate the impact of the fiscal measures that have so far been introduced, aimed at supporting the sector, and to introduce additional initiatives if deemed necessary. The key dates for registering on the system are February 28, 2015, for those applying the SCE from January 1, 2015, June 30, 2015, September 30, 2015, and December 31, 2015.
 
 
Source: Tax News

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EU commences further negotiations to combat VAT fraud

 

EU commences further negotiations to combat VAT fraud

 

12 February 2014

From 1 January 2012, the EU introduced a regulation on administrative cooperation in the field of VAT. Since then, this regulation has allowed EU member states access to each others VAT databases and has facilitated the general sharing of information in an attempt to fight the ever-increasing instances of VAT fraud. This has enabled EU tax authorities to work together to decrease the amounts of lost VAT revenue (which totalled €193bn in 2011).
 

In an attempt to further decrease lost revenue, particularly in the telecoms and e-services sectors, the EU has undertaken exploratory talks with Norway, Russia, Canada, Turkey and China in an attempt to put in place a framework for information sharing similar to that introduced by the EU regulation. Recently, further negotiations have commenced with both Russia and Norway on the subject, and both of these countries have indicated that they would be willing to commence formal negotiations.

 
 
Source: accordance vat

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Tanzania: Government won’t backtrack on EFDs

 

Tanzania: Government won’t backtrack on EFDs-TRA

 

12 February 2014

As traders continue to strike over the use of Electronic Fiscal Devises (EFDs), Tanzania Revenue Authority (TRA) has said that the government will not backtrack on the directive. Acting Commissioner of Tanzania Revenue Authority (TRA), Rished Bade, said his authority will continue to stick to its guns and those who will go against the directives, their licenses will be revoked indefinitely. Quoting Rished Bade

“There is no excuse on this. Traders must use the devises as directed,” Bade said, stressing that the time for tax avoiders has gone. ~ Bade.”

He said TRA has made a number of efforts to train traders on the use of the gadgets for the past three years. So, businessmen have nothing to say on this. Meanwhile, traders in the northern capital city of Arusha on Wednesday closed down their shops in protest against the use of Electronic Fiscal Devises (EFDs). No shopping was made since morning as no shop was open on the entire day as all traders gathered at the Golden Rose Hotel discussing on a number of issues related to the devices. Business community in Arusha joined their fellow traders, who are protesting against the vice in different parts of the country, such as Dar es Salaam, Ruvuma, Dodoma, Musoma, Mbeya, Makambako, and Iringa. Arusha joins Dar es Salaam and Mwanza regions, where traders have been closing their shops, demanding that the government backtracks on the issue of EFDs.

 

Grassroots sensitization required on TRA’s EFDs revenue system 

Closing down businesses, sitouts and suchlike have dotted Tanzania’s commercial landscape in recent weeks and months. They were staged to melodramatise the message that traders are against a novel business transaction recording system introduced by the Tanzania Revenue Authority (TRA). The system is centred on a programmed recorder, an Electronic Fiscal Device (EFD), effectuated on July 1, 2010. Traders with an annual turnover of Tsh14m are perforce required to use the devices, failure of which is statutorily punishable. When properly installed and applied, EFDs electronically record trade transactions on the spot, including ‘issuing’ receipts for all goods and services ‘purchased.’ EFDs are ‘connected’ to appropriate TRA equipment. Consequently, tax officials automatically receive a recording of trading transactions, and how much tax revenue accrues there from. If the system is to work more efficaciously, then the relevant institutions must provide ‘grassroots’ education thereof nationwide. Indeed, TRA is already doing that via its website and electronic broadcasts. The ‘Trader Massawe’ promotion via Radio Tumaini is a good start. Massawe no longer hides or runs away from TRA inspectors who call at his premises, and his ‘books’ are now a delight, thanks to the EFD system. If nothing else, this indicates that we must reach more ‘Traders Massawe’ to make a resounding success of the system.
 
 
Source: speechlog

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Malaysia: Govt might rake in billions after MyEG completes Online Tax Reporting project

 

Malaysia: Govt might rake in billions after MyEG completes Online Tax Reporting project

 

14 February 2014

 

PETALING JAYA: MyEG Services Bhd, one of the best-performing stocks last year, has finally landed the job to wire up businesses that are required to pay tax to the Government – a project that has been mooted to beef up the Government’s coffers. The over-riding objective of the project is to plug a loophole that currently allows businesses, particularly entertainment outlets, to evade paying tax on sales to the Royal Malaysian Customs Department (Customs). It is also to facilitate the Government’s implementation of the impending goods and services tax (GST) starting from April next year. The amount that the Government is losing out is not known, but the sum is estimated to run into the billions. 

In an announcement yesterday, the company stated that it had been awarded a RM180mil contract by the Customs to undertake the Customs Online Tax Reporting (Electronic Monitoring System – EMS) project. The tenure of the project is for a period of six years and will commence from April 1. According to the statement, the project will entail linking up point-of-sales terminals and cash registers of businesses that are subject to the Customs’ tax collection.

“This will enable the Customs to effectively monitor tax collection revenue for the Government,” it said.

 

The project to wire up businesses has been shrouded in controversy, as there were several contenders for the job due to its lucrative returns. Although the face value of the contract is small, it is seen as a prelude to the company generating more recurring income from the maintenance and supply of the equipment installed in the businesses. MyEG had mooted the project several years ago and stated in previous reports that it had invested more than RM100mil in developing the system. 

It finally made some headway in the project when it announced last month that it had completed a pilot Customs Service Tax monitoring system, cementing its position to win the job. The pilot project was undertaken by MyEG Integrated Networks Sdn Bhd, a company where it has a 40% stake. The announcement yesterday did not specify details on the company awarded the EMS project. The euphoria surrounding MyEG picked up pace after Barisan Nasional was retained as the Government in last May’s general election.
 
Since May last year, the stock rose some 178%, making it easily one of the best performers for the year on Bursa Malaysia. MyEG ended at RM2.89 yesterday, inching up nine sen. The company is of the opinion that the project will contribute positively to its earnings for the financial years ending June 30, 2015 onwards.
 
The source of funding for the project is expected to be obtained from internally generated funds and bank borrowings.
 
 
Source: The Star

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Rwanda: Understanding the e-billing initiative

 

Rwanda: Understanding the e-billing initiative

 

23 February 2014

Any business that will not have installed an Electronic Billing Machine (under the Rwanda Revenue Authority e-billing initiative to is ease taxation) by April 1 will be penalised. E-billing, which has become the talk of the town in the City of Kigali and other areas around the country, is benefits to taxpayers and promotes compliance.
 
The government is optimistic that proper use of these electronic gadgets to issue invoices will increase tax revenues, especially the Value Added Tax (VAT) that is paid in by the final consumer. That’s why consumers are also benefiting from the ongoing Consumer Compliance Awards administered by RRA with the aim of promoting the culture of asking for receipts by the Rwandan community.
 
It is also believed that a responsible and patriotic generation of consumers can help the tax body become efficient in the collection of VAT by always demanding an electronically-generated receipt after every purchase. The move is also likely to encourage voluntary billing machine compliance. This is because of the fact that most buyers do not take the initiative of requesting for invoices whenever they buy commodities irrespective of the likely bad effects, especially in circumstances when the goods bought can be easily confiscated, requiring one to present evidence (a receipt) that the items are theirs.
 
The issuance of receipts to clients was not an easy task before the introduction of electronic billing machines because it was thought to ‘time consuming’ by the buyer and seller. However, with this new e-billing machines installed at taxpayers’ premises, it is now easier than ever. This has also made easier for buyers to demand for receipts for items bought (otherwise one risks having their goods confiscated on the way home as stolen or smuggled items).
 
With the use of electronic billing machines, one can easily monitor a multiple of their shop’s operations and manage stock, thus limiting the chances of mismanagement by unscrupulous employees. You can also easily get your books of accounts correct at all times, making it easy to file tax returns than before. For those taxpayers who qualify for VAT refund, it does not take a long time before your money is cashed back into your accounts by the tax body.
 
So, it is important that every business operators starts using electronic billing machines as they will help in monitor of all transactions, facilitate payment of genuine taxes with no penalties imposed after the set deadline of March 31.
 
 
Source: newtimes Rwanda

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Tanzania: Use of Electronic Devices a Must, Traders Warned

 

Tanzania: Use of Electronic Devices a Must, Traders Warned

 

23 February 2014

Government has maintained that the contested Electronic Fiscal Devices (EFD) must be used by the business community since the machines have been formally introduced in the country. Finance and Economic Affairs Minister, Ms Saada Mkuya made the statement in Dar es Salaam while addressing graduates at the sixth graduation ceremony of the Institute of Tax Administration (ITA).

“There is no way government is going to stop the use of the devices since they have been officially introduced. We will fight legally and ensure they are used as required,” she noted. 

Ms Saada asked the traders to stop looking for excuses and instead comply with the law for the benefit of their businesses and the nation at large. She said that was the only way to solve the challenges the traders encounter on the use of the EFDs and not the abandoning of the machines.

“It is possible that the (traders) protesting the use of EFDs now have sufficient knowledge on the importance of the machines. We need to continue creating public awareness,” she said.

The Minister asked the business community and the public in general to be patriotic by paying taxes for the development of the nation. In a separate development, she asked ITA to be creative towards the development. She was responding to a request by the institute that had asked government to providing the institute with 70b/- in the next financial budget for expansion of the institute. The Minister asked Tanzania Revenue Authority (TRA) to support the institute. Earlier on the Board Chairman of the TRA, Bernard Mchomvu told the Minister that TRA has plans to upgrade the institute to meet international standards. About 660 students graduated.
 
 
Source: Tanzania Daily News

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Malawi: EFDs now operational

 

Malawi: EFDs now operational

 

4 March 2014

The Malawi Revenue Authority (MRA) on Wednesday announced the introduction of a tax compliance tool called Electronic Fiscal Devices (EFDs). During a press briefing held at Msonkho House, the Authority’s head office, MRA Commissioner of Domestic Taxes Nellie Jimu said the use of EFDs will among many benefits, increase tax compliance levels in the country. She said the devices transmit all sales data to MRA’s server which will help the Authority easily assess the correct amount of Value Added Tax (VAT) and Income Tax.

“We are introducing EFDs following the enactment of the law in July 2011 to introduce and enforce the use of these devices. The EFDs are an advanced version of electronic cash registers that record all sales transactions at the point of sale. They have fiscalised memory which means data cannot be erased,” said Jimu.

 

The Commissioner said the machines produce fiscalised receipts containing data needed to assess tax while at the same time using GPRS/mobile network connectivity to transmit the data to MRA’s central server. She then appealed to every member of the general public to demand a ‘Fiscal receipt’ generated by the EFDs.

“For the EFDs to work out perfectly, we would like to appeal to every member of the general public to demand a fiscal receipt for goods bought or services rendered from VAT operators. By demanding fiscal receipts, consumers will be assured that their VAT has indeed been recorded and accounted for,” Jimu said.

 

Some of the the features of a ‘Fiscal receipt’ will among others include, name and address of the operator, taxpayer identification number (TPIN) of the operator, an MRA logo, serial number of the device, total value of the sale, description of the goods or services, quantity, unit price, tax rate chargeable and amount of tax. The Commissioner further said the EFDs are the advantageous to businesses since they have a stock management module to help operators manage their stock and that its data reliability will lessen tax audit disputes.

“For MRA this means increased tax compliance, improved taxpayer record management, reduced time taken to assess, audit and collect, reduced audit queries, objections and appeals,” said Jimu.

 

The Deputy Commissioner General, Crispin Kulemeka, made a presentation titled ‘Facts about VAT: What it is and how it works’ which reminded all VAT operators to visibly display their certificates and emphasized that anyone contravening the law on taxes will be apprehended and penalised accordingly.
 
Taking his turn, MRA’s Commissioner General John Biziwick, said introduction of the Electronic Fiscal Devices will play a significant role in improving efficiency and effectiveness in the administration of VAT, therefore increasing revenues that will better enable Government to improve delivery of social and economic services. He said the Authority will always endeavour to find ways to enhance tax compliance, increase revenues and reduce cost of compliance by the taxpayers.

“We have appointed and certified qualified local distributors, from whom eligible VAT operators can procure EFD’s and also obtain all necessary services including installation, training, integration to your existing systems, maintenance and also secure after sales support. The authorised distributors are; Business Machines, Canotech Limited, Gestetner and Xerographics. The EFDs are available to buy from 6th March, 2014 and the roll out will be in phases. The initial phase begins from 6th March to 31st June 2014. This phase is targeting all VAT operators that are currently issuing manual receipts. These operators are also using ordinary cash registers,” said Biziwick.

 

The Commissioner General said all VAT operators that will procure, install and use the EFDs within the stipulated time frame will benefit from a Cost Recovery Scheme.

“What this means is that if they procure, install and commission their EFDs through an authorised local distributor, using their own finances, they will claim 100% cost of the device from MRA through subsequent VAT returns. There will be no cash refunds, but the Government will offset the cost incurred through VAT returns. The second point to note about the implementation of the EFDs is that this is mandatory. All VAT operators that do not have EFDs by the stated period will be punished in accordance with the law,” Biziwick said.

 

The Commissioner General further stressed that by demanding the ‘Fiscal receipt’ consumers will know that their tax will reach the final destination, businesses will have well managed records which means reduced cost of compliance and MRA will ensure that the correct amount of VAT is accounted for and collected, leading to low cost of tax administration.
 

 
Source: MRA

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Kenya: Online Shopping? It Is Here in Africa Already

 

Kenya: Online Shopping? It Is Here in Africa Already

 

5 March 2014

Over Christmas I was in Scotland, and was amused at the media furore about online shopping. ‘ More people shopped online yesterday (Christmas Day) than will venture onto the High Street for the Boxing Day sales.’ Thundered one tabloid, ‘ It spells the end of a decades-old tradition.
 
But the figures supported the outrage. Scots alone (not a race renowned for parting with its money) logged twelve million Internet hits to spend Sterling Pounds 29 million on Christmas Day. Never mind spending time in Church, or exchanging gifts with family. This was reprogrammed to permit online shopping. Barclaycard conducted a survey which revealed that while a third of people would wait until the evening, a fifth would shop during lulls in the day’s festivities, but 12% intended to shop in the early morning, or immediately after opening their presents.
 
Professor Bamfield of the Centre for Retail research was quoted as saying:’ Shopping on Christmas Day has become a new Christmas tradition.’ While other retail experts predicted that retailers who adapted and pushed online and in store sales at the same time would prosper in future years. Part of the reason I was amused is of course that online shopping is growing apace in Africa. Some of it is very specialized, offering cosmetics or sunglasses (two of the biggest e-commerce sites in Nigeria). But many more are moving rapidly towards the amazon.com model with wide ranges of goods and payment options. In countries like Kenya where mobile money transfer is second nature to everyone, there’s rapid uptake. But even in markets where doubt remains about security of payment, online retailers are offering ‘pay on delivery’ options.
 
Jumia claims to be Africa’s No 1 online store, with coverage of Uganda, Kenya, Nigeria, Morocco, Egypt and Ivory cost. But you can Google hundreds of other offerings right down to individual cake shops. Africans have always been bargain hunters. Witness the huge industry that we in East Africa call ‘mitumba’ – vast nearly new, factory seconds or unwanted fashion markets spawned in the early days by donations of clothes from wealthy western countries. Nowadays millions of these clothes and shoes circulate the globe as part of the second hand clothing trade (SHCT). Although the SHCT accounts for approximately 0.5% of global trade in clothing, more than 30% of those imports went to Sub-Saharan Africa (SSA) as early as 2005. Figures provided by an Oxfam report indicate that used garments, initially collected and sold by western charities, account for nearly 50% of the clothing sector in SSA.
 
In most major African cities, these huge markets are carefully and intelligently segmented. So the young bank teller knows that by visiting market x she may well turn up a pair of Jimmy Choo shoes. While students preparing to leave for colder climes like Canada know that market Y will equip them with Timberlands, fleeces and fur-lined parkas.
 
Imagine the business that online shopping is going to generate in Africa in the next ten years.
 
 
Source: The Star, Kenya.