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Author: rodelin

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SPAIN: AEAT storms multiple sites to prevent organised tax evasion

 

SPAIN: AEAT storms multiple sites to prevent organised tax evasion

 

20 March 2015

SPANISH Tax Agency (AEAT) has launched a crusade against zappers, which allow taxpayers to easily hide accounting records.

In December 2014, a special task force with AEAT technicians uncovered the complex fraudulent practices in a chain of Italian restaurants. 70 officials from 8 regional offices, along with police officers simultaneously stormed 15 sites where chain operated throughout Spain. Such organised action was necessary to prevent POS software operators to erase tax records and thus destroy tax evasion evidence.

The action uncovered a sophisticated system designed to fictitiously reduce revenue from restaurants through a software application that produces double set of books. The operation “Pasta Fresca” (Fresh Pasta) allowed AEAT to break into system matrix installed by the order of Italian franchise owned corporation. The name of the restaurants is not disclosed due to ongoing investigation. Operation Pasta Fresca is part of a plan of the Agency against the growing practice of malicious software, which is installed in cash registers or POS where accounting records are kept.

Treasury officials have discovered hidden computers in the back rooms or hidden behind secret cabinets. In this operation the officers realized that the top floor of the warehouse, under investigation, had less height than the ground floor. After searching the premises for five hours they found a room with a running server. The entrance to this room was hidden behind a wardrobe.

In July last year, similar investigation uncovered a system used by a chain of shoe stores, which diverted up to 30% of its real revenue through a double billing computer system.

In the case of Italian franchise, the system was essentially a regular management software for restaurants, but it included an option to apply fake discounts to customer bills, mostly for revenues collected in cash. The franchise also required their subsidiaries to install additional software that allowed management a access remotely (SSaaS); thus, management could decide on the amount of cash moved out from the accounting records. Franchisees restaurants had agreements to pay a royalty-commission for the use of the zapper, of around 5% of its turnover.

Agency officials made backups of all computers found in the 15 restaurants and HQ. After a first analysis, treasury sources estimated that unreported sales by these restaurants is totalling over four million euros.

 

Source: salesdatacontroller

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Tanzania: TRA Moves to Tame Fuel Tax Cheats

 

Tanzania: TRA Moves to Tame Fuel Tax Cheats

 
21 March 2015
 
The Tanzania Revenue Authority (TRA) is on its final trials before fixing Electronic Fiscal Devices (EFDs) at all fuel pumps, in a move aimed to improve collection of tax. The taxman said initial trials conducted for almost a year at Engen’s pump stations has shown positive results not only to the authority but to the firm on maximising revenue. The TRA Principal Officer, Mr Hamis Said Lupenja, said the trials would go on for the next few months until all discrepancies are sorted out before the procedure was formally implemented in other filling stations.
 
“We want to perfect the performance of the machines and devices prior to the stakeholders’ approval,” Mr Lupenja told the ‘Daily News’ at TRA headquarters on Monday.
 
Information from reliable source within TRA had it that the device had been specifically designed for petrol stations.
 
“It (device) cannot refill another car if it issues receipt to the previous car. We’re optimistic of collecting a huge sum from this system,” the source said.
 
 
Mr Lupenja said TRA’s previous directive for filling stations to use normal EFD failed, because motorists as other traders, have no culture of demanding receipts.
 
“We shop around and come up with the idea of fixing the EFD at the pumps. In this once a pump attendant makes a delivery it is automatically registered on TRA computers, the taxed amount,” Mr Lupenja said. “With this device, installed inside the pump, it will not matter whether a motorist demands a receipt or not, the tax is automatically collected.”
 
Though, he said, it is an offence to buy anything without demanding a receipt and the buyer is liable to a penalty of 1.0m/- while a trader is fined 3.0m/-.

Nevertheless, the TRA Officer said the move was part of the Authority’s second phase of expanding EFD users’ bracket to non-VAT traders. In the coming phase to be launched mid next month 200,000 traders are targeted. The traders eyed those with their annual business return which is 14m/- and above, but for filling stations it will be applicable even if their stations are selling below the prescribed figure. According to TRA, the service has been well received by Engen as it assists them on recording the right sales to gauge out any element of fuel pilferage.

 
“But we will continue with the trial run until all stakeholders’ doubts are addressed,” he said.
 
 
The stakeholders include Tanzania Bureau of Standard, Weigh and Measure Authority, as well as oil dealers. The same system of refunding EFD traders will be extended to the filling station owners where they bought the device and they’ll be repaid during the sales processing.

Since the introduction of EFDs 2010 positive achievement were recorded on tax collection from VAT docket as its revenue increased by over 23 per cent in the said period.

 
“I don’t have a figure with me, but it’s more than billions of shillings,” Mr Lupenja said. The statistics department is working on the numbers.”“
 
 
The Bank of Tanzania data shows that TRA collected 864.9bn/- in December last year and exceeded target by 4.4 per cent compared to the previous month. The main challenge the taxmen are facing is awareness as advantages of EFDs are in three dimensions — trader, customer and the public — on issuing and demanding the receipts after every purchase. Engen Petroleum Tanzania was founded in 1996 when Engen Petroleum Limited purchased the Kurasini Terminal, Isaka Depot and Kigoma Depot from Bulk Oil Ltd.
 

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efd solution avatarbooks accounting tax management

 

 

Benefits of the Avatar ERA solution

  • broadens the tax base though increased domestic tax collection, lower cost of compliance and reduced revenue leakage
  • eliminates red tape and increases ease of compliance for vendors
  • lowers cost of collection for fiscal authorities
  • increases efficiency of tax administration

 

The Avatar ERA solution provides

  • new fiscal auditing tools at central and local levels
  • VAT-compliant electronic Sales Data Controller (SDC) devices to all merchants and traders
  • greater transparency and fairer tax collection practices
  • improved fiscal infrastructure security
  • improved information exchange between relevant government entities

 

 

Unique characteristics of the Avatar Electronic Revenue Assurance (ERA) solution

Governments bring the consumer into the compliance circle with the introduction of an online fiscal lottery to reward all consumers who request and retain their VAT-return confirmation tickets at the point of sale. The Avatar invoicing system can transmit the lottery ticket to the consumer electronically—by SMS. This allows governments to have access to real-time, highly secure sales and fiscal data at the point of sale, and a VAT-compliant environment is created.

 

 

Our Solution offers:

  • robust EFD devices to suit all vendor environments, including those with limited access to power or other supporting infrastructures
  • battery-operated devices for environments with frequent power outages
  • devices operating multiple SIM cards, to reduce downtime and lost sales as a result of communication failures
  • backup systems in the event of a total system failure caused by loss of power and/or inactive telecom GPRS networks
  • secure back-up with call centre agent assistance for sales declarations and issuing of electronic VAT ticket through simple technologies and processes—USSD, secure SMS or IVR—in case of a complete failure of the merchant’s devices

 

 

Other benefits of the Avatar Electronic Revenue Assurance Solution:

  • seamless integration between EFD devices and data servers
  • secure data warehousing facilities
  • real-time information management allowing for close monitoring of EFD device usage
  • 100% intrusion-proof network
  • customer-incentive strategies to increase compliance

 

 

The Avatar platform

We were aware of the shortcomings of other electronic fiscal devices and platforms currently deployed across Africa and world-wide—which motivated us to develop an optimal solution to deliver measurable results consistently and cost-effectively, in a variety of environmental and infrastructural conditions.

 

Why the Avatar platform is suitable for any market:

  • multiple layers of redundancy throughout the system—devices support several SIM cards—to provide redundancy on the GPRS transmission layer
  • Border Gateway Control protocols implemented to provide dual data link connectivity between Avatar and the government department in control
  • real-time transmission of transactions between devices and Avatar servers
  • network integrity monitoring system with real-time alerts in the event of malfunction anywhere in the system
  • comprehensive dashboard enables authorised users to monitor the network and device activities in real time, while the business-intelligence layer allows for quick decision-making
  • communication links and an information platform operated on a secure private network creates a secure and closed ecosystem with no contact with the Internet
  • real-time data replication
  • remote device management
  • fail-proof security protocols at device, network and user levels
  • dynamic, flexible, customisable and scalable architecture.
 

Compliance is easy and value-added services win over the customer.

We understand that even a perfectly designed electronic invoicing solution cannot succeed without the willing participation of the taxpaying customers, so our solution incorporates a number of benefits for the customers themselves–to create value, ease the burden of compliance and improve cost-effectiveness.

 

 

Avatar’s business approach includes the following benefits and incentives for the taxpayer, facilitating the introduction and imposition of the electronic fiscal declaration network by the authorities:

  • free online accounting software for all traders who are VAT-compliant
  • secure data warehousing facilities
  • seamless integration with revenue authority systems—no need for the customer to purchase additional expensive hardware—cost of compliance is very low
  • real-time access to electronic sales ledgers for bookkeepers or accountants to monitor VAT declarations, make corrections and process merchandise returns
  • generation of automatic tax declarations subject to review by the user before submission to the Revenue Authority
  • immediate calculation and processing— improves cash flow for the business
  • more transparent and accurate calculation of tax liabilities, thus allowing businesses to plan timing of payments more efficiently
  • permanent backup and archiving of all financial records, remote access for the customer in the event of device or personal computer failure

 

 

How Avatar’s Electronic Revenue Assurance (ERA) Solution can be applied to the telecoms industry

Avatar has created an ERA solution to meet the challenges of telecoms revenue assurance for both fiscal and telecoms regulatory authorities.

 
Our high-tech solution—the Airtime Revenue Monitoring System (ARMS)—enables:
  • controlling all tax transactions related to revenue
  • monitoring
  • audits
  • airtime and mobile money top-up revenues for telecoms

 

 

The Avatar ARMS solution is designed for use in multiple tax environments:

 
  • telecommunications regulatory authorities who need accurate and complete operator revenue data that can be independently verified
  • fiscal authorities who must verify and audit the tax declarations of the telecoms carriers
  • banking regulatory authorities who need appropriate tools to ensure the security and the solvency of mobile banking operations and the collection of forensic data in the battle against cyber fraud and money laundering

 

 

Find out how countries have improved their tax collection and tax revenues

 

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Contact us by completing our contact form. We are available to discuss your specific project needs in greater detail to help find the best solution for you and your business.

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about page fiscal governance technologies

About Avatar

Avatar Technologies Ltd (ATL) provides cutting-edge Electronic Revenue Assurance (ERA) solutions to revenue authorities. Avatar Technologies was founded by Global Voice Group S.A (GVG), technology specialists in financial protection and revenue generation systems since 1998.

 

Avatar Technologies is directly supported by GVG, and so brings to revenue authorities:

  • GVG’s many years of experience in providing technology-driven revenue assurance solutions
  • The expertise resulting from GVG’s track record of approximately 1.5 billion USD over eight years in new revenue generated for governments of emerging countries.

 

Our Mission

Our mission is to increase domestic tax revenue so as to reduce dependence on foreign aid—creating governments that are empowered, self-reliant, and free from external interference—countries able to determine their own futures. GVG’s many years of revenue-assurance experience in Africa has imbued Avatar (ATL) with a first-hand understanding of:

  • the use of technology to fight tax evasion
  • the under-declaration of revenues
  • fiscal fraud

 

 

The introduction of billing systems at the point of sale prevents tax evasion, the under-declaration of revenues and fiscal fraud.

 

Avatar –Build-Operate-Transfer (BOT) partnership with governments

Avatar Technologies is more than just a world-class provider of anti-sales-suppression solutions.

 

ATL offers a full turnkey solution and complete infrastructure under build-operate-transfer (BOT) arrangements with governments for long-term partnerships.
 

This arrangement includes:

  • fully funded Electronic Revenue Assurance (ERA) infrastructure, including EFD* devices, secure network and all requisite information-management-platform components
  • 100% financing
  • comprehensive staff and vendor training
  • technology transfer and in-country support
  • 24/7 in-country customer service support

 

 

*EFD (Electronic Fiscal Devices)—devices offering Electronic Billing, Electronic Tax Registers, Sales Register Machines, Sales Data Controllers, Electronic Signature Devices, Fiscal Cash Registers, Fiscal Printers, Certified Invoicing System, Certified Cash Register Systems, Fiscal Data Modules, a Control Unit and other anti-sales-suppression devices prescribed by government.

 

Find out more about Avatar’s electronic invoicing solution.

 

 

 

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home page avatar electronic solution optimization tax compliance

Avatar is the only Electronic Fiscal Solution designed to address tax compliance issues successfully in developed and developing countries.

Either on-premise or Cloud-based, Avatar Technologies offers a highly secure solution working in real-time to create an environment to promotes tax compliance. Although tax compliance is a worldwide issue, it is particularly problematic in emerging countries, where the difference between the VAT due the State and the VAT collected is 50% to 60%, compared with 7% to 13% in developed countries.The ‘VAT gap’ in European Economic Community countries was almost €170 billion in 2013.

In Africa alone, an estimated USD 50 billion is lost each year due to fraud and tax avoidance. Taxes due to governments represent 10 times the total aid budget.

Tax evasion and avoidance deprive countries of huge sums that could solve many of their financial and socio-economic problems. Tax fraud is greatly facilitated by the lack of control over sales transactions and by consumer-negligence in the failing to ask for receipts.

 

Our solution allows countries to leverage their domestic tax resources in order to finance their own development and reduce their dependence on foreign aid.

 

Avatar is the answer.

 
Avatar provides governments and revenue authorities with a secure sales and fiscal information platform where:
 
  • sales and fiscal data are gathered at the source of the transaction and securely transmitted to government revenue databases in real-time
  • merchant identities are authenticated prior to the transaction and each receipt is verified through highly secure digital signatures
  • fiscal information is analysed automatically for accurate and valid decision making by the revenue authorities.

 

 

Find out more about our solution.

 

 

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Kenya: KRA change tact to nab stamp duty and ETR tax cheats

 

Kenya: KRA change tact to nab stamp duty and ETR tax cheats

 

April 22, 2013

The Kenya Revenue Authority said Friday that counterfeit stamps have become common, costing it significant amounts in revenue loss. It has yet to quantify revenues lost annually through counterfeit stamps though. Commissioner General John Njiraini said it is developing a ‘track-and-trace’ back-end system to support field surveillance of stamps usage.

“The system will be able to tell the difference between fake and genuine stamps with almost 100 per cent certainty…. The issue of counterfeit stamps is quite prevalent but we will now follow up to get the real culprits,” he said.

 

A team of 50 staff will be dispatched to monitor the market on ground and using the system, and will be increased to 300 within three years. KRA said domestic excise duty collection is also under-performing owing to a shift in consumption patterns for beer and cigarettes.

“Consumption of beer and cigarettes is moving from brands with higher tax rates to brands with lower or zero tax rates, such as Keg,” Njiraini said.

He said the agency will install a production-line technology to eliminate under-declaration, initially roping-in cigarette manufacturers. Beer makers will then be targeted and eventually the whole drinks and beverages industry, including bottled water.

 

Implementation of the first two phases of the new excise tax management system will be complete before end of May. KRA has also noted discrepancies in VAT performance, with collections from large taxpayers rising only by 0.6 per cent to Sh35.7 billion in the nine months to March. The medium and small taxpayers segment recorded a 26.1 per cent growth in VAT in the same period.

“We are investigating several incidences of invoice trafficking for the purpose of supporting VAT input claims. One case is complete and we will be moving to court shortly,” said Njiraini.

 

KRA will start tracking ETR machines remotely to get real time data on VAT from points of sale. Monitoring ETRs is at present manual, creating loopholes for tax evasion.

“We expect to have all ETR devices GPRS-enabled within the 2013/14 financial year,” he said.

Njiraini also hopes Parliament will “give priority” to enacting the pending VAT Bill whose delay he said is costing KRA about Sh11 billion, besides fuelling a build-up in VAT refund claims.

 

KRA is also interlinking its new system for handling electronic declarations for domestic taxes, dubbed iTax, with 20 banks for the start. It hopes to interlink with all banks by July.

“We are discussing how to ensure rapid uptake of the system by taxpayers… there is no reason why some taxpayers file returns manually,” he said, hinting at making use of the system mandatory.

The iTax system has the capability for electronic payment, eliminating the need for taxpayers going to Times Tower to remit.

 

Source: The Star, Kenya