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Author: rodelin

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Rwanda: RRA eyes wider tax base

 

Rwanda: RRA eyes wider tax base

 

5 August 2014

The Rwanda Revenue Authority (RRA) has launched the 13th Taxpayers’ Day celebrations with a promise to widen the country’s tax base. The Tax payer’s Day showcases the contribution of taxpayers to national development.
 
The celebrations under the theme: “Invoicing: A basis for taxation and a foundation for Book keeping”, is an opportunity for RRA to display various trade facilitation and communicate prospects to spur business development by providing desirable services, according to RRA’s Drocelle Mukashyaka, the Deputy Commissioner for Taxpayer Services Department.

“This year RRA is planning to engage various leaders at different levels in a dialogue on taxation and self-reliance with view to increase partnership in revenue mobilisation and, at the same time, publicly appreciate all those that were exemplary as far as tax payment and mobilisation are concerned,” Mukashyaka said at the launch yesterday.

 

Taxpayer’s Day is an annual event that was launched in 2002 through as a platform for raising taxpayer’s awareness.
 
This year’s celebrations will be taken to various districts across the country with the national celebrations slated for August 30, in Kayonza District. The best taxpayers will be recognised during this celebration.
 
Meanwhile, speaking at the same event, RRA’s Commissioner General, Richard Tusabe, said the revenue body will continue expanding the country’s tax base to meet its targets.

“RRA will continue engaging various stakeholders at different levels in a dialogue on taxation and self-reliance aimed at increasing partnership in revenue mobilisation, the target is realistic but requires concerted effort from all stakeholders,” Tusabe said.

Revenue performance

The revenue performance (tax and non-tax revenues) for July 2013 to June 2014 stood at Rwf769bn against the set target of Rwf793.2bn, figures from RRA indicate.

“The performance indicates an achievement of 96.9 per cent,” Tusabe said.

He said revenue collection during July 2013-June 2014 grew by 15.9 per cent with total tax revenue collection amounting to Rwf758.6bn short of the target of Rwf782.5 billion. 

Widening tax base

As a way of ensuring that RRA achieves its set targets, Tusabe said the revenue body will seek to enhance Value Addition Tax (VAT) invoicing operations. We will continue to enforce the use of Electronic Billing Machines (EBMs), in Kigali and other cities and towns across the country, he said.
 
He noted that so far a total of 5,154 taxpayers out of expected 6,896 have acquired EBMs.
 
RRA announced a number of measures by which it seeks to bolster tax collections, including working with the local government to ensure all traders are registered with the tax administration.
 
The tax body also plans to improve the collection of local government taxes by investing in modern technology that will assist in having a reliable database for collection, audit and enforcement.
 
Other measures include continuous enhancement of various initiatives aimed at improving service delivery and business environment including expanding usage of e-services for filing and payment of taxes, enhancing implementation of the electronic window system, and rolling out the gold card scheme in customs.
 

 
Source: The New Times, Rwanda.

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Tanzania: Traders warned against use of unregistered EFDs

 

Tanzania: Traders warned against use of unregistered EFDs

 

18 August 2014

Use of unregistered Electronic Fiscal Devices (EFDs) is illegal and will draw severe legal penalties, traders have been warned. The warning was issued over the weekend by the Tanzania Revenue Authority (TRA) whose officials say hefty penalties will be levied against the perpetrators.
 
Speaking to this paper over a telephone interview, TRA’s Director for Taxpayer Services and Education, Richard Kayombo confirmed that there are traders using unregistered EFDs which he described as ‘fake gadgets not legally recognized by the law’.

“We are going to conduct random inspections throughout the country and stern legal measures will be taken against anyone proved to use these fake EFDs,” Kayombo warned.

 

The development comes in the wake of last week’s findings that implicated the marketing and advertisement firm, CI Group’ in Dar es Salaam of using a fake EFD machine. In a dramatic turn of events, Fasad Nasoro, Owner and director of CI Group was arrested during a random visit of his firm by Deputy Minister of Finance, Mwigulu Nchemba mid-last week. The machine he is accused of operating and which he was found in possession of, had serial numbers 031TZ 54000053.

“We are dragging them to court…they are attempting to cheat the government out of its due revenue through tax evasion,” Kayombo, TRA’s Director for Taxpayer Services and Education accused the firm.

 

Kayombo further asserted the authority‘s determination to have all eligible traders use the machines as required by the law.

“EFDs are meant to enable the government levy appropriate taxes and ease the collection process…they also help the business owners keep accurate records of their transactions and for clients to have receipt evidence of purchases,” he explained urging all traders who haven’t yet begun using the machines to do so.

 
SOURCE: THE GUARDIAN

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Rwanda Govt agencies blamed for tax collection shortfall

 

Rwanda Govt agencies blamed for tax collection shortfall

 

19 August 2014

The Rwanda Revenue Authority (RRA) recorded Rwf759.8 billion in total tax revenue collection during the July 2013-June 2014 fiscal year, which was short of the targeted Rwf782.5 billion. This, it has emerged, could be partly because some budget officers in public institutions have not been remitting taxes collected from civil servants on behalf of RRA, contrary to standing guidelines.

According to Richard Tusabe, the RRA Commissioner General, many government institutions budget managers do not submit tax collections and neither can they account for the money. He, however, declined to say which government agencies had not remitted the taxes.
 
The tax body chief attributed this laxity to negligence or corruption tendencies among budget officers. This was one of the many challenges RRA cited as having a huge blow on their annual tax collections targets during a government officials’ tax dialogue last week in Kigali.
 
Tusabe told participants that they would remind budget managers of their obligations.
 
According to the recently-released Auditor General’s report, a total of Rwf2.7 billion deducted in taxes by government agencies was not remitted. This represents an increase of Rwf2.65 billion compared to Rwf52.3 million registered in the 2012/2013 financial year. Taxes that were not deducted amounted to Rwf592.1 million compared to Rwf564.6 million over the same period.
 
Dorcelle Mukashyaka, RRA deputy commissioner general, said all government budget officers were well aware of their responsibilities, adding that though RRA has carried out numerous trainings for budget managers in government institutions, the problem has persisted.
 
According to the report, taxes that were deducted, but not remitted to RRA include Pay As You Earn (PAYE) amounting to Rwf2.22 billion, while Rwf214.1 million was not deducted at all. 

Value Added Tax totalling Rwf77.2 million was not deducted from suppliers, while Rwf15.4 million was deducted but not remitted to RRA by some entities, it indicated. About Rwf2.2 million was not deducted as 3 per cent withholding tax from suppliers while Rwf1.9 million was deducted, but not remitted to RRA by some agencies. The total sum of Rwf83.7 million was never deducted as 15 per cent withholding tax from service providers.

“The concerned people should answer why they don’t remit the money because the law clearly states that they should deduct and declare to RRA,” Mukashyaka explained.

Nelson Ogara, a senior manager at PricewaterhouseCoopers Rwanda, said failure to remit the taxes to RRA impacts on the economy.

“If the money supposed to be spent by the government is not collected, this creates avoidable shortfall,” he said.

He added that if the money remains on the government treasury account, it would not be used as required to support Rwanda’s economic growth.

 
The other challenges facing RRA include resistance to use electronic billing machines and online tax payment facilities, a large informal sector, ‘hard to trace’ cash transactions, smuggling and tax evasion.
 
Source: The New Times

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Tanzania: No Respite for EFDs Non-Compliant, TRA Says

 

Tanzania: No Respite for EFDs Non-Compliant, TRA Says

 

2 September 2014

Non compliant businesses to the Electronic Fiscal Devices (EFDs) will not escape the ‘legal arm’ following a countrywide inspection campaign by the Tanzania Revenue Authority (TRA) in collaboration with the Police Force.
 
In Dar es Salaam Region, over 10 shops out of 70 inspected in the campaign that kick-started two weeks ago, have been closed down for failure to comply with the use of the devices.
 
Some were issued with strong warning, paid the fines and allowed to continue with businesses. The TRA move also aims to unearth users of the unregistered EFDs which could be described as ‘fake gadgets not legally recognized by the law.’
 
The revenue body says, the unregistered devices were brought in the country legally but were not registered for use in the revenue collections process.

“The use of unregistered EFDs is illegal and will draw severe legal penalties,” said the TRA Commissioner General, Mr Rished Bade in news conference yesterday in Dar es Salaam.

He said that the inspection process has already been launched countrywide to disclose non compliant as well as those using unregistered gadgets, who will then face legal measures.

“EFDs are meant to enable the government levy appropriate taxes and ease the collection process. Also they help the business owners keep accurate records of their transactions and for clients to have receipt evidence of purchases,” he said.

According to Mr Bade, the recent inspection in various parts of the country found out that some traders were yet to procure the devices and others had bought but were not using them. Some issue receipts showing less amount of money paid in a transaction.
 
Few traders have already been arraigned after they were found using unregistered machines thus cheating the government out of its due revenue through tax evasion.
 
Last month, the marketing and advertisement firm, CI Group in Dar es Salaam was found to be using a fake EFD machine. The managers of the firm have so far been taken to court. Speaking at the event, the Director of Criminal Investigation (DCI), Mr Isaya Mungulu, warned traders reported to be intimidating others who are using EFDs to stop or face the wrath of the police force.

“We call upon the business community to comply to the rules and regulations demanding them to use of the EFDs to avoid colliding with the law enforcers,” he said.

 

Source: Tanzania Daily News (Dar es Salaam)

 

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Kariakoo halts after EFDs protest

 

Kariakoo halts after EFDs protest

 

2 September 2014

Business at Tanzania’s busiest commercial enclave of Kariakoo in Dar es Salaam almost came to a standstill yesterday as most traders refused to open their shops, protesting the introduction the Electronic Fiscal Devices (EFDs) by the Tanzania Revenue Authority (TRA).
 
A ‘Daily News’ survey witnessed a number of shops along all streets in the sprawling enclave stopped as many customers, some of whom had travelled all the way from upcountry to purchase their requirements were stranded. A number of traders who spoke to the ‘Daily News’ said that they have reached such a decision to protest the use of EFDs following the inspection campaign launched by TRA and the Police Force to inspect the use of the devices among traders countrywide.

“They are forcing us to use the EFDs, which are very expensive and also too inconvenient. We won’t resume business until this matter is resolved,” said one of the traders who said he owns a phone shop. “Using EFDs will be tantamount to working for TRA, which is totally ridiculous.”

 

The trader stated that he was not going to do any business only to end up paying some of his earning to the TRA.

Another businessman, Athumani Seif, said TRA should sit down with them to find another appropriate tax payment system instead of using EFDs, which he claimed are ‘’a big rip-off.’’

“I don’t think this idea, which they are enforcing on us will succeed. They will keep on forcing us and we will keep on resisting and at the end of the day it won’t help rather than causing more impact. I, therefore, think that TRA should sit with traders and find another more appropriate means,” he said.

 

However, the TRA Director of Education and Taxpayer Services, Mr Richard Kayombo, said they won’t stop the already started inspection campaign, as they were doing it in accordance with the laws governing orderly business. He warned that non-compliant traders will face stern measures.

“The protest by some traders will not stop the exercise which has started since two weeks ago. Those who want to close their businesses because they don’t want to use the gadgets can do so. Those who want to keep on doing business must make sure that they comply with the use of the devices,” he said.

 

The TRA publicist said a number of problems concerning the use of the devices among the traders were revealed just a few days after the exercise started.

“A recent inspection has revealed that most traders haven’t procured the device while some are using fake EFDs (unregistered devices by TRA),” he said, adding that some traders have also been issuing forged receipt to customers while some traders had actually bought the device but have not been using it.

 

Mr Kayombo went on to explain that they will keep on conducting the inspection campaign countrywide and all those using unregistered EFDs as well as those who don’t want to use the devices will face legal measures.

“I call upon all the traders in the country to comply with the use of the devices to avoid any inconveniences as well as ensuring accurate records for their transactions,” he appealed.

Mr Kayombo said that any of those traders who will be caught mobilising others to protest against the campaign will face legal measures too as that was also against the law.

“The police force is keen in supervising this exercise and therefore, those who want to close their businesses should better do it on their own because any kind of mobilisation for collective protest will not be tolerated since that is against the law,” he observed.

 

According to TRA, the EFDs, which also have to be adopted globally, was introduced to help the government levy appropriate taxes and ease the collection process.
 
Also, they help business owners keep accurate records for their transactions while clients are assured of purchase records.
 
 
Source: Daily News

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Billing Machines Increase Tax Collection By 16%

 

Billing Machines Increase Tax Collection By 16%

 

8 September 2014

Barely six months after the introduction of Electronic Billing Machines, Rwanda revenue authority (RRA) says the results are impressive. Speaking at this year’s tax payers’ day celebration on Saturday, the commissioner general of RRA, Richard Tushabe, said the machines are helping the government increase its tax base. The commissioner also said the tools have helped cut down time spent screening books of accounts.

“Auditors used to spend hours investigating and going over massive documentation, but with the EBM, audits are easily conducted,” he said.

 

Tushabe also said RRA is now able to catch tax evaders with less effort. The same technology is used in countries such as Sweden, Germany, Greece, Ethiopia and Kenya to combat tax evasion.
 
More than 6000 traders have installed the machines and RRA expects more than 1000 traders to install the machines soon. Every registered machine records all transactions and indicates Value Added Taxes expected to be remitted to government coffers. Only businesses with a turnover of at least Rwf 20m (USD 29,000) per year are obliged to use billing machines. Those who don’t are penalized.
 
RRA predicts an exponential increase in tax collections at the end of the current financial year. Last year’s domestic revenues to the budget was Rwf782.5 billion equivalent to 62%. In financial year 2014/15, collections are projected at Rwf906.8 billion, increased by 16% from last year.
 
Meanwhile tax payers’ day was celbrated in Kayonza Distrcit, Eastern Province. The Prime Minister, Anastase Murekezi, who presided over the lemony requested Rwandans to fulfill their tax obligations and help the country get rid of dependency on foreign aid.
 
Bank of Kigali was recognised as the overall tax payer.
 
 
Source : KTPRESS

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Slovakia: How To Catch Tax Dodgers With a Lottery

 

Slovakia: How To Catch Tax Dodgers With a Lottery

 

15 September 2014

Slovakia has a VAT gap because too many businesses are not paying the tax money they owe.
 
Slovakia’s solution to its VAT problem is a lottery. By sending in or registering a sales slip online, consumers can win a car, cash, or an invitation to be a contestant on the Slovakian “Price is Right.” (For the Macedonian VAT lottery, it is a house!) Once the government has the sales slip, it can see what the retailer owes in taxes.
 
So, where are we going? To the amazing gap in Value Added Tax receipts in the eurozone.
 
Sort of a distant relative of the sales tax, the VAT is a consumption tax. For a pretzel, if we levied a VAT, as with the sales tax, our pretzel would have a higher price at the cash register. But with a VAT, that elevated price is based on the value that is added to the product at each production stage, At the last stage, because businesses pass it along, the consumer covers the full VAT payment. (Sounds simple but the economics are much more complex because of the incentives.)
 
To go after the tax dodgers, Slovakia just needed to know that was happening at the cash register. Suddenly, businesses are being asked for receipts by customers who never cared about them. Having collected 64 million receipts since September 2013, the government says the lottery has been a huge success.
 
Our bottom Line: VAT Gaps
 
You can see below that Slovakian VAT gap is large. They are missing 37% of what they should have collected. As we might expect, with 39% less than what they should be collecting, Greece also has a gargantuan VAT gap. By contrast, Germany, at 13%, does not. Our bottom line? The VAT gap is further evidence of the vast fiscal discrepancies in the eurozone countries.
 
 
Source: econlife

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Albania to launch fiscal receipt lottery

 

Albania to launch fiscal receipt lottery

 

7 October 2014

Albanian government aims to fight grey economy in the country by launching soon fiscal receipt lottery, thus following similar move in neighbouring Macedonia of last year.

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Shiny, new cars, satellite imagery and loft clearance – the new face of governance

 

Shiny, new cars, satellite imagery and loft clearance – the new face of governance

 
2 June 2015
 
A few weeks ago, Jozef Lazarcik, a Slovak factory worker, won a new car in a national lottery. Big deal, you say. People take home extravagant lottery prizes all the time. But Lazarcik’s lottery win was more than a shiny free ride. It was a ticket out of Slovakia’s economic slump.
 
This is a story of how one Eastern European nation is fighting tax evasion. It is also a story of how the public sector responds to complex challenges, and how critical government roles are evolving.
 
Slovakia, according to a recent article in The New York Times, is having difficulty collecting VAT from its merchants. VAT, or Value Added Tax, is a source of government revenue akin to a sales tax. It is charged to consumers and businesses alike, and is remitted to state treasuries by business. The amount of VAT owed to the government can be manipulated via fraud or aggressive minimisation schemes.
 
To encourage tax compliance, the Slovak government crafted a clever lottery. Members of the public submit their VAT receipts to the lottery, and while the government chooses a lucky winner, it also checks the receipts, looking for fakes. The ingenuity of the lottery is admirable. This is out-of-the-box thinking, a creative solution to a problem many countries face. Slovaks are now clamouring for VAT receipts from their merchants. Clearly, we are meant to applaud these sorts of initiatives. This very ingenuity, however, feeds a sense of foreboding at the evolving picture of governance and statecraft. Are we now bribing members of the public to recruit them into vigilante tax collectors? Was this not once the role of the state, or is that now being crowd-sourced? How long will the supply of free cars last?
 
You don’t have to live in Slovakia to care about these issues. At their heart lie questions of how governments interact with their constituents, be they citizens or businesses. Monitoring these issues is one way to predict how a government’s challenges – and its responses – evolve. Keeping a close eye on these issues can help predict future government behaviour as well.
 
Slovakia’s experiment has impact far beyond its borders. According to the Times article, many of the countries where tax evasion is high are also recipients of substantial economic bailouts from supranational organisations like the EU. Put bluntly, it would be nice to know that the recipients of bailouts are doing what they can to bring their financial affairs into order. At the heart of the issue in Slovakia – and in Greece, Portugal, and other countries struggling through the massive fiscal downturn – is the matter of whether the state can (re)assert itself in the teeth of a crisis. What does the Slovak lottery say about how it will manage other parts of the economy, where clever lotteries aren’t the solution? What happens once the new cars lose their factory-fresh smell?
 
Shrinking government budgets mean diminishing resources for enforcement. Corruption means that for a small consideration, tax inspectors look the other way. Greece, where tax collection has been chronically lax, resorted to satellite images to identify luxury homeowners – they looked for the swimming pools – who claimed they owed no income tax. This only serves to demonstrate how difficult it is to eradicate tax evasion. Experience shows that once the state – or its lottery-crazed populace – gets more clever at spotting tax cheats, the tax cheats just become more clever.
 
So the race is on. The Slovak lottery is a close relative to an initiative taking root in the UK – the nudge movement, brought to you by a partnership between the Cabinet Office and The Behavioural Insights Team. UK residents may already be familiar with the nudge movement, so called because it uses behavioural guides to steer us toward socially productive habits.
 
These socially productive habits include insulating our lofts (it saves energy), paying our taxes more promptly (boom go the government’s coffers) and paying fines on time (see previous item). These and similar initiatives rely on doing one simple thing to encourage a related behaviour. Britain’s heat-leaking lofts, for example, were far too cluttered for people to take advantage of a government-backed insulation programme. Once that programme included a de-cluttering service, uptake on the insulation soared. These measures, in turn, seem closely related to the Malcolm Gladwell family of social and government initiatives, as chronicled in his book The Tipping Point.
 
On balance, these creative initiatives strike a hopeful tone. Perhaps resolving thorny fiscal problems doesn’t require years of hearings, white papers and legislative debates. Perhaps instead of bloated bureaucracy, we only need cleaner lofts. There will always be problems that resist simple solutions. Let’s see where we get nudged to next.
 
 
Source: Control Risks
 
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Tanzania: Use of EFDs doubles revenue collection – TRA

 

Tanzania: Use of EFDs doubles revenue collection – TRA

 

11 August 2014

The Tanzania Revenue Authority (TRA) has reported more than double increase of revenue collections in just three years, an achievement the agency is associating with increased use of Electronic Fiscal Devices (EFDs).
 
TRA says the business community in the country is now increasingly more complacent with the use of EFDs which they had previously rejected.

“The growing willingness of businesses to use EFDs is a direct result of awareness campaigns along with enforcement efforts conducted throughout the country,” TRA Director for Tax Services and Education, Richard Kayombo explained. “As a result, between July 2010 and June 2013 we have seen our revenue collection increase by 59 per cent,” he revealed in an interview with this paper at the turn of the week.

 

The Director for Tax Services and Education said now that they are better informed, response to the use of machines by the business community’s is very positive.

“We have had a number of workshops with members of the business community on the importance of the machines and the response is increasingly positive,” he said. “Though we do not have the exact figures, as to the increase value but more and more businesses are using EFDs and revenue collections are also increasing,” Kayombo said noting that the system will continue to increase revenue collections as the number of traders using it continues to grow.

 

He said the authority is currently targeting to enlist at least 200,000 traders in the second phase of their awareness campaign which started late last year.
 
However, other than the efforts by the authority, Kayombo acknowledged that sustainable use of EFDs is also very much dependant on consumer’s ability to demand for receipts for every purchase done.
 
The use of EFDs previously received wide spread rejection by traders countrywide. In February this year, shops in Dar es Salaam’s Kariakoo, Mwanza, Morogoro, Mbeya and Kagera regions remained closed for at least two full days, that being one of many previous protests against the EFDs.
 
Speaking to journalists in Dar es Salaam during that protest period, Dar es Salaam Business Community (JWK) Chairman Johnson Minja had at the time said the traders are not against paying taxes but rather they are against the method being enforced on them.

“The EFDs are not friendly to traders,” he argued warning that “… the Value Added Tax (VAT) of 18 per cent is too high and can lead to businesses folding up.”

 

Also at that time, the Kagera Region Business Community Chairman Amini Kyaruzi told a news conference in Dar es Salaam that the community had been urging the traders not to protest without success.

“The government should ensure it creates a friendly environment with traders,” he said.

Commenting, a Mwanza based businessmen Ngowi Miwani said: “This is a very bad system and if the machines are to be used businesses will collapse and the economy of the country will fall.”

As the protest went on, complacent traders were increasingly threatened by others and the Mwanza Regional Commissioner Evarist Ndikilo was forced to order police protection for them.

“Those who do not want to use the devises should not intimidate those who are ready to use the EFDs,” he said.

 

Similar incidents were reported in Morogoro, Mbeya and elsewhere in the country despite legal requirement on the use of the EFDs.

In response, TRA conducted various awareness campaigns to increase the knowledge of business communities across the country on the use and benefits of EFDs, efforts which are now seen to bear good fruit.
 
 
SOURCE: THE GUARDIAN