VAT Lottery: In Slovakia, Real Lottery Prize Goes to Tax Man

19 April 2014

When Jozef Lazarcik, a 35-year-old factory worker, heard his number called on national television here recently, he pumped his fists, hardly believing his luck.

He had registered only nine receipts with Slovakia’s new tax lottery, and yet he had just won a new car. Over the last 10 years, Slovakia’s revenue from value-added taxes, a type of sales tax, has declined. But hiring auditors and pursuing individual merchants and service providers in court is expensive and slow. So last fall, the government decided to put a lottery in the mix. The idea is to enlist average citizens to collect receipts from their purchases and register them with the government, creating a paper trail for transactions and forcing restaurant and shop owners to pay the sales taxes they owe.
 
As Slovakians register their receipts for the lottery, a computer will also tell them if a merchant has issued a receipt with a fake tax identification number, so they can report suspected fraud. For any purchase worth more than 1 euro, or about $1.38, Slovakians can enter their receipts in a monthly lottery to win €10,000, a car or a chance to be a contestant on the Slovakian version of “The Price Is Right.” Tax officials say the lottery is already having a big impact, and other European countries that are also struggling with the collection of value-added taxes have considered it — including Portugal, which started its own tax lottery on Thursday.
 
In Slovakia, about 450,000 people have taken part, registering about 60 million receipts, officials said. Complaints about merchants who will not give receipts have skyrocketed. In the six months before the lottery began, the government received about 300 such complaints, officials said. In the first few months after it started, that number rose to 7,000. Value-added taxes are an important source of income for European countries, but collecting them has grown more and more difficult during the economic crisis.
 
A recent report for the European Commission found that uncollected value-added taxes in the European Union — a measure known as the value-added tax gap — amounted to about $267 billion in 2011. Across the bloc, that gap increased by five percentage points on average since the onset of the debt crisis in 2008. But for some countries — especially Greece, Ireland, Latvia, Portugal, Slovakia and Spain — the problem has been particularly acute.
 
A decade ago, Slovakia was able to collect about 80 percent of taxes due, said Peter Golias, the director of Ineko, a nonprofit economic research group here. That figure is now about 60 percent, putting Slovakia in a league with Greece for the poorest record on the collection of value-added taxes.
 
Tax collection began to increase early in 2013 and rose more sharply after the lottery began. Officials say they collected about $512 million more in 2013 than in 2012. How much of that is a result of the lottery may never be clear. But Mr. Kazimir said that it was surely a big factor, and that it had cost only about $276,000 to get the lottery going. He said the new influx of complaints had already proved that it was not just small businesses that were cheating: Chain stores have also been caught giving fake receipts.
 
In Portugal, too, the value-added tax gap has grown since the start of the economic crisis. Having asked for a bailout of about $108 billion in 2011, it is under pressure from its creditors to do better. 

Portuguese officials believe their tax lottery will be especially effective because gambling is popular among Portugal’s 10 million inhabitants, who are already among the biggest participants, in terms of spending per capita, in the EuroMillions lottery shared by nine European countries. Over the past decade, the Portuguese have spent an average of about $1.2 billion a year on EuroMillions.
 
Paulo Núncio, the Portuguese secretary of state for tax affairs, said the government was counting on the new lottery to raise its tax revenue by about $830 million to $1.1 billion. Even before the start of the Portuguese tax lottery, it was generating excitement. In the food court of the Amoreiras shopping mall in Lisbon recently, customers ordering hamburgers joked that their lunch order could result in a new car.
 
The lottery project has drawn criticism from some Portuguese opposition politicians who say it is a capitalist tool to turn citizens into tax inspectors.
 
Diogo Ortigão Ramos, a partner at the law firm Cuatrecasas, Gonçalves Pereira in Lisbon, said the lottery also raised “questions of compatibility with E.U. law.” For the time being, though, the European Commission has not addressed this issue. Portuguese merchants say they have already seen a change. João Raposo, a restaurant owner, said customers were increasingly asking for a full tax receipt, when “five years ago nobody would have bothered.”
 
 
Source: nytimes

Slovakia has found the solution to increase the VAT collection

22 April 2014

Slovakia has found the solution to increase the VAT collection: a lottery tax receipts and prize of 10,000 euros per month. Other countries want to follow suit.

After a campaign of “shame” against those who do not pay taxes, wages increased tax inspectors and tax administrations stop political appointments, Slovakia has started a lottery taxes which relies on increased revenue from value added tax (VAT) and evasion of public support. Slovak authorities said the lottery tax is a real success and has already contributed to increased tax collection and the number of complaints on neemiterea tax bills. Such a lottery would be a solution for other states with acute problems of tax collection rate, Portugal recently adopting the model.
 
Last fall the Slovak government, whose tax revenues have declined in the past decade, decided to create a lottery taxes to encourage consumers to retain receipts when shopping and to record them in a set of government and designed to monitor transactions and to force restaurants and shop owners to pay the VAT rate that due to The New York Times.
 
Program created by the government indicates those who register receipts if the issuer used a false identification number, and consumers can report any fraud. In return for the aid given to the IRS, the Slovaks can win the lottery taxes 10,000 per month, a car or a chance to participate in the “right price”.
 
The Slovak authorities say that the system has already applied remarkable results, which led to several European countries facing problems in collecting VAT to consider its application. Portugal has implemented the program last week. Portuguese authorities say charges will be successful lottery because gambling is popular among the 10 million inhabitants of the country.
 
Countries with acute problems in collecting VAT include Greece, Ireland, Latvia and Spain, countries affected by the crisis. Around 450,000 Slovaks played the lottery before tax and registered about 60 million tax bills, according to officials in Bratislava.
 
Number of complaints on traders not issue tax receipts increased considerably. Six months before the start of the program, authorities received 300 such complaints, and the number increased to 7,000 in the first months of operation of the lottery.
 
“So far the program has been a success,” said Slovak Finance Minister Peter Kazimir.
 
Ten years ago, Slovakia collect about 80% of the fees payable and the collection rate dropped to 60%, said Peter Golias, director of research Ineko quoted by The New York Times.
 
Lottery is not the only attempt Slovak authorities to increase tax revenues collected. In recent years, the government in Bratislava initiated a campaign of “shame” against those who do not pay taxes, wages increased tax inspectors and tax offices closed political appointments.
 
Amounts collected from VAT began to rise at the beginning of last year and the trend was accentuated after the start of the lottery tax. The Slovak authorities say last year they collected 512 million dollars (370 million euros) more than in 2012.
 
Finance Minister said that the lottery tax that was placed on the feet with just $ 276,000 (200,000 euros), was an important factor in increasing tax collection. He pointed out that the number of complaints registered on neemiterea tax receipts showed that not only do fraud boutiques but chain stores.

Macedonia: 5th drawing for the fiscal receipts lottery 28 April

22 April 2014

Macedonia/5th drawing for the fiscal receipts lottery 28 April. Citizens, except by post, can also submit the envelopes with fiscal receipts in the point of the State Lottery at the City Square in Skopje. 

State Lottery of the Republic of Macedonia said that a car, 30 pecuniary prizes from MKD 3.000 to MKD 60.000 and 120 pecuniary prizes for food products from MKD 1.000 will be drawn.
 
Fiscal receipts lottery started on December 1 and the first drawing was held on December 30 when and apartment and a shop in Skopje were the main prize.
 
State Lottery of the Republic of Macedonia organizes the fiscal receipts lottery ”Fiscal receipts in hand, prize without pain,” under the auspices of the Ministry of Finance.
 
 
Source: republika

Uganda: URA to Train MPs in Tax Collection

1 May 2014

The Commissioner General of Uganda Revenue Authority Allen Kagina has offered to train MPs in tax collection methods, if Parliament gives her the nod of approval. Appearing before Parliament’s committee on Finance, Planning and Economic Development on April 22, Kagina said some MPs lack expertise in some areas of taxation. She offered to organise a half-day training session.

“Please honourable members, allow me to give you a half-day training course on matters of domestic revenues, and I am ready to do this myself and my staff. We don’t measure tax revenues the same way other countries do, but there is room for growth,” a jolly Kagina explained.

 
Her suggestion followed submission by Ntenjeru North MP, Amos Lugoloobi [NRM], who asked her to explain why Uganda’s domestic revenue projection was nearly the lowest on the continent.

“I think there is a serious problem with our domestic revenue resource mobilization because we are being left behind by other countries. For example, the projection of our domestic growth is 13.4% when it is 20% in Rwanda, 20% in Nigeria and 20% in Ethiopia. Is it the funding problem or is it your weakness as URA?” asked Lugoloobi.

Tororo County MP Geoffrey Ekanya [FDC] added: “What Honourable Amos has raised is a serious problem because other countries are growing economically, leaving us behind. So, the commissioner general should explain to us this low development in domestic revenue.”
 
Kagina was also asked how much telecom companies contribute to the country’s economy. Many MPs accused the telecommunication companies of conniving with some agencies to rip off people by providing unsolicited services such as text messages and dropped calls.

“How much do you get from telecom companies in form of revenues and why don’t you impose heavy taxes for the charges they always take from us through unsolicited messages and dropped calls?” Kabula MP James Kakooza [NRM] asked.

Kagina answered: “It is a serious problem because I have often got unsolicited messages and calls, and I always ask these telecom companies who gave them my number, but in vain. So I think it’s the regulator’s problem because it must be the one to intervene to solve this problem.”

Source: The Observer (Kampala)

Zimbabwe: Fiscalisation project stalls

4 May 2014

Business Editor
 
Ten days from now Tanzania’s taxman, Tanzania Revenue Authority (TRA), expects consumers to demand fiscal receipts for everything they buy “even if it is beer, a soda or a needle”, as the second phase of fiscalisation kicks in. Already, the first phase has been completed. Unfortunately, the project has remained largely abortive in Zimbabwe despite Government making fiscalisation legally enforceable by gazetting Statutory Instrument 104 of 2010 on June 8, 2010. In particular, the legal instrument requires all companies whose annual turnover is more than US$240 000 (Value Added Tax category C), to record their sales using electronic fiscal devices.

 
Fiscalisation essentially entails introducing electronic fiscal devices (EFDs) — machines designed for use in businesses for efficient management controls in areas of sales analysis and stock control system — such as electronic tax registers (ETRs), electronic fiscal printers (EFPs) and electronic signature devices (ESDs). In essence, these devices are designed to capture all sales information and automatically re-route it to the tax authorities who in turn are able to see how much they are owed by companies.
 
TRA is generating much of the oomph needed to drive the project to its logical conclusion from the encouraging increase in revenue generation since it began the policy in 2010 — ironically the same time that Zimbabwe began its own fiscalisation project. The Authority observes that tax collection improved by 9,6 percent between 2010 and 2011 and 23 percent for 2011 to 2012. Due to the expanding use of the electronic tax register, TRA now expects to collect US$370 million (600 billion shillings) a month, up from the current US$250 million (400 million shillings).
 
The Zimbabwean Government believed that local revenue collection would inevitably improve by configuring fiscal devices to enable them to record sales and other tax information on the read-only fiscal memory at the time of sale for use by the tax authorities in Value Added Tax (VAT) administration. However, market watchers say that the Zimbabwe Revenue Authority (Zimra), which is the lead agent in implementing the process, has been lethargic, a development that has stagnated the process.
 
Last week, a Harare-based tax consultant, who preferred to remain anonymous, said that although the project was launched four years ago, currently there is no system to connect organisations to the proposed Zimra database.

“There is no system to connect organisations to the proposed Zimra database in line with Clause 4(d) of SI 104 / 2010. The project has stagnated and not all registered VAT operators have complied with fiscalisation. This is against the backdrop of massive Government spending estimated at around US$10 million in VAT rebates for companies that complied with the law. Small to Medium Enterprises, which have been cited as not contributing to the fiscus, should naturally be included in the next phase of fiscalisation. However, this is not possible due to the current pedestrian state of the project. Zimra does not appear to be too keen to move to the next phase,” said the expert.

There are suspicions in the market that some Zimra bosses might have been “influenced” to maintain the status quo by a powerful clique of business lobbyists that is benefitting from evasions. This has, however, never been proved. Some sections question why there has been lethargy in implementing the project especially after Zimra’s board chairman Mr Sternford Moyo confirmed that fiscalisation had improved compliance and contributed to the good performance of VAT collections for the year ending December 31, 2012. In fact, he noted that, “to some extent, fiscalisation levelled the playing field for large operators thereby improving compliance”.
 
Zimra Commissioner-General Mr Gershem Pasi conceded last week that the Authority’s system is yet to be connected to retailers.
He said the project will resume during the third quarter (between July and September) of the year.

“The technology that we had identified was not really appropriate and was costing more to convert it to be compliant with the computerised system, so we are reviewing that and we will be coming up with a more user friendly system soon. We are almost through the scoping. . . When we started the project, the authority had not been enabled to receive data from the machines, we did not have the capacity and that is the capacity which we are now putting in place.
 

Source: Sunday Mail