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Author: rodelin

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Efficiency requirements for EFDs

 

Efficiency requirements for EFDs

 

26 June 2015

Avatar’s solution ticks all the boxes

Taxation control is a worldwide issue, but an especially critical one for emerging and developing countries, where tax revenues only represent 10% to 14% of the GDP. These figures are much lower than the 20% recommended by the OECD to allow these countries to meet their development goals.

Experience has shown that tax authorities that had ditched the paper-based administration for electronic sales recording methods had dramatically enhanced their visibility over the tax-related data and were able to counter tax fraud more efficiently. As a result, electronic fiscal solutions, and more specifically Electronic Fiscal Devices (EFDs) are now the talk of the town, as an increasing number of countries show interest in their implementation.

However, a recent working paper by Peter Casey and Patricio Castro concerning the impact of EFDs on taxpayer compliance and administration efficiency and published by the International Monetary Fund (IMF) concludes that “the implementation of EFDs can only be effective if it is a part of a comprehensive compliance improvement strategy that clearly identifies risks for the different segments of taxpayers and envisages implementing a set of measures to mitigate these risks”.

A “comprehensive compliance improvement strategy” is exactly what the EFD solution developed by Avatar Technologies Ltd offers. The solution was designed to create a tax compliance-enabling environment in all areas of the retail sector, to the benefit of the governments, the taxpayers and the consumers, involving all three groups of stakeholders into the compliance process.

Through Avatar’s EFD solution, tax authorities get more than just sales-recording devices. Yes, the latest generation of EFDs, Avatar G4 or G5, are set up at points of sale in order to record transactional data. But these EFDs also feed a highly secure, Cloud-based tax data ecosystem, the Avatar Fiscal Cloud, which forms the core of the solution and is controlled by the regulatory authority. This allows the latter to access, in real time, the data it needs in order to accurately determine the revenue it is owed from the retail sector and to curb tax fraud.

Avatar’s solution also wins over the taxpayers by making compliance easy, affordable and rewarding for them. They benefit from 24/7 in-country customer support and can retain already-existing devices, provided they have them certified. Avatar also provides them with free access to several value-added services, such as AvatarBooksTM. AvatarBooksTM is a fiscally compliant, highly secure and user-friendly Cloud-based application that allows for efficient accounting and tax management.

As far as the consumers are concerned, they are brought within the compliance circle through an incentive program, in the form of a Fiscal Lottery. Avatar understands that it is crucial to involve the consumers, as they have the power to force compliance on the traders simply by claiming their purchase receipt. The lottery ticket number automatically appears on every receipt printed using an Avatar G4 or G5 device.

Avatar’s EFD solution thus addresses the main concern raised by Casey and Castro’s study, which is that EFDs are only effective if they are used as part of comprehensive tax compliance improvement strategy. Not only that, it also shows that tax compliance can be cost-effective, hassle-free and rewarding for all the stakeholders.

Read the whole paper: http://www.imf.org/external/pubs/cat/longres.aspx?sk=42820.0

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Promoting electronic transactions and IT fiscal solutions to reduce the informal economy in developing countries

 

Cashless payments in Kyrgyzstan

 

17 June 2015 

Promoting electronic transactions and IT fiscal solutions to reduce the informal economy in developing countries.

Developing countries are becoming increasingly aware of the potential of taxation when it comes to strengthening their economy and substantiating their national budget. The widening of the tax base and efficient tax administration are now high on these countries’ agenda for development. And not a minute too soon: estimations have shown that the revenue losses experienced by the governments of these countries due to tax fraud and the informal economy are staggering.

In Kyrgyzstan, for instance, the “shadow economy” deprived the country of US$6 billion since its independence in August 1991. It reached its maximum size between 1998 and 2011, at a shocking 58% of the GDP. Although it has decreased since then, to reach 48% in 2014, it still cost the national budget the equivalent of US$974 million that same year.

This prompted the government of Kyrgyzstan to adopt a program, during the first quarter of 2015, aiming to improve tax procedures for small and medium businesses. Consequently, several laws have been adopted to encourage not only businesses, but also individual consumers, to implement and use non-cash payment methods when selling or purchasing goods and services. Although the banking sector is developing at a steady pace, and the number of bank cards in circulation reached 908,908 at the end of 2014, only one consumer out of three currently makes non-cash payments in Kyrgyzstan (Source: http://www.timesca.com/news/15061-cashless-payments-to-reduce-shadow-economy-in-kyrgyzstan).

In order to be able to offer a cashless payment option, businesses will need to acquire electronic sales recording devices. The authorities will then have to monitor the use of these devices, if they are to gather the data they require to enforce tax compliance. Realizing the informal economy reduction plan initiated by the Kyrgyz government will require not only a unified state policy, but also relevant technologies. In order to facilitate the acquisition of such technologies, the Parliament has approved a number of changes to the tax regulations in place, to allow imported banking equipment for cashless payment to be exempt from VAT (Source: http://www.timesca.com/news/15061-cashless-payments-to-reduce-shadow-economy-in-kyrgyzstan).

Since this program relies heavily on tax incentives for the compliant businesses and on the consumers’ involvement, it is crucial to select the right technological solution. Ideally, this solution should help the tax authorities to create the right conditions to make tax compliance not only verifiable and controllable, but also more incentivising.

In this respect, the Avatar electronic fiscal solution is currently the most advanced and the most comprehensive on the market. It would allow the Kyrgyz government to include the consumers in its efforts to promote tax compliance. The involvement of the consumers in the compliance process is essential, as the number of receipts issued by the traders is greatly influenced by the number of these same receipts claimed by the customers. Thanks to its integrated fiscal lottery feature, Avatar’s EFD (Electronic Fiscal Device) solution would allow the authorities to considerably increase the number of claimed receipts and to involve the consumers in the tax compliance loop.

The key issue as far as the informal economy is concerned, whether in Kyrgyzstan or elsewhere, is the fiscal inclusion of the citizens. It must be encouraged and facilitated, not only through well thought-out laws and programs, but also through the implementation of adequate technological means.

 

Read the whole article: http://www.eng.24.kg/bigtiraj/175105-news24.html

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Is Ghana Ready for a Cashless Economy?

 

Is Ghana Ready for a Cashless Economy?

 

4 June 2013

Various economies of the world are moving from the use of cash to a situation where digital  is applied. Is Ghana ready for this new revolution? FRED YAW SARPONG report.

It is getting clear that many countries in the world are switching from doing businesses by using physical cash to a situation where all transactions will be done by digital means. This is mainly common in developed countries and many other developing countries too have started implementing it. Cashless economy is what many call it.

It is an economy without cash, it uses digital money instead, and transactions are made easily. Or a cashless economy is one in which the purchase of goods and services and the payment of debts and remittances are done through electronic money media, (via credit cards, and debit cards, direct transfers from one account to another, visa cards, smart cards, mobile payment systems, and other technologies, etc.). In some years back, cashless society based mainly on barter, gift economics and debt, and then evolved to the use of money. In some countries like United State of America (USA), majority of the people use cards while little as 29% are still with cash. In Australian cash use still at 64% while in UK, cash use is projected to drop to 45% by 2018.

Ghana, as a developing country in West Africa has taken the initiative to introduce a system where businesses can be done without using physical cash. Bank of Ghana, the regulator of the banking industry through Ghana Interbank, Payment and Settlement Systems (GhiPPS) introduced e-zwich card, where Ghanaians will feel comfortable in using the card to transact businesses rather than physical cash.

Even though there has been several effort to educate the masses about the product, the education on this e-zwich have not go well with many Ghanaians. A lot of the citizens as of today do not even know there is something called e-zwich card. With a population more than half of it been illiterate, there must be a thorough education where all Ghanaians will understand and use the platform.

In Ghana, some of the common cards we can identify are such as Sika Card by SSB, Visa Horizon by Standard Chartered Bank (Stored Value cards), deployment of Automated Teller Machines (ATM) and ATM cards by banks eCard (CAL Bank, Ecobank) and among others. Advantages of using these platforms are that it reduces the cost of printing currency notes. It’s also cost less in transporting cash along the value chain from the Central Bank to banks to businesses and consumers.

According to Nigerian Central Bank Governor, Sanusi Lamido Sanusi, direct cost of cash management to the Nigerian banking industry is estimated to be N192 billion (approximately US$1.9 billion by end of 2012). The Central Bank of Nigeria introduced a new policy on cash-based transactions which stipulates a ‘cash handling charge’ on daily cash withdrawals or cash deposits that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies. The new policy on cash-based transactions (withdrawals & deposits) in banks, aims at reducing (Not Eliminating) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.).

It reduces the risks associated with transporting currency notes, both for banks and individuals (robbery, loss from fire or flood, etc.). Survey conducted by MTN Ghana office, indicated that 4 in 10 Ghanaians carrying cash more risky; 6 in 10 during travel and 1 in 10 Ghanaians using informal services had money stolen.

The use of this platform formalising informal transactions; transparency helps combat crime and corruption; record keeping reduces room for tax avoidance (eGhana); increased service options for consumers – accessibility 24/7. The net effect on business and economic growth through e-commerce, promote and enhanced productivity.

One area which stakeholders in the financial sector and for that matter the central bank have not done well at all is the Mobile Money Payment platform. Kenya is perfect example where over 80% of the Kenyans use M-PESA mobile money transfer. Many of the Kenyans are transacting businesses through this platform rather than using physical cash. Mobile Payments are defined as chain of payments that are initiated using mobile handsets and other devices, either to directly purchase or to authorize payment for goods and services. Mobile Payments has the potential to serve these unbanked and underserved segments of the society. Globally, just 37% banks provide some form of mobile banking service.

By the end of 2012, there were over 1 billion mobile banking users, conducting 47 billion transactions annually and generating over US$600 billion worth of financial transactions in the world, according to Ericsson survey.

At a forum recently in Accra to discussed cashless economy, the Managing Director of Ghana Commercial Bank (GCB), Mr. Simon Dornoo said the country will needs about 290,000 Point of Sale (PoS) terminals, valued at US$145 million to  push the country into the arena of a cashless economy. PoS terminals, which have been identified as critical to achieving the objective of e-electronic payments system, are electronic devices that enable customers to make payment to merchants in exchange for goods and services. He stated that a research had shown that globally, leading countries with e-payments system had an average of 2,200 PoS terminals per 100,000 adults.

“How do we finance this investment and what is the appropriate role of each stakeholder in the development of the electronic payments system,” he asked participants at the forum. “The payments infrastructure has expanded and banking systems are now interoperable so the conditions are right to move a lot faster to join those countries that have made significant progress towards this goal.”

 

Ebenezer Asante, MTN Sales and Distribution Executive recently said in a statement that given the benefits a cashless society affords us, it is important that we continue to do all we can to encourage a cashless economy based on technology. However, there are challenges we must resolve in order to chart a clear path forward.  We must focus on a number of key areas in the short and medium term. Some of these challenges involve policy, infrastructure and others.

Policy — We need clear policies in place that would allow us to follow a structured advance towards achieving the full benefits of a q2cashless economy, including a national policy that encourages more electronic-based transactions, while discouraging physical cash usage and circulation. He said a policy that prescribes a structured approach is a step in the right direction to a well thought-out, properly sequenced cashless economy implementation.

Infrastructure – We need to expand our infrastructure and systems to the point where we are ready for a cashless economy, and electronic transactions are truly ubiquitous and sustainable; so that everyone – retailer, service provider, consumer or business – can have the option to transact electronically regardless of location, or even time. According to him, this means that the technology coverage must be adequate, as well as other supporting structures such as energy availability for consistent connectivity and reduced downtime.

‘This tells us we must have a singular focus on educating people about the full benefits of a cashless economy. The benefits afforded them as well as the benefits afforded the country as a whole.  This is something that must be done by all stakeholders because as a country we all benefit,’ he added.

 

Perhaps government should consider using its own purchasing power to radically promote cashless payments as a first step. He explained that ‘when we consider the history of money, we realize that what we have today is the result of many years of innovation; innovations that have been in response to the changing needs of mankind and the need to find solutions outside our limitations.’ Comparing centuries ago and now, technology now offers us the opportunity to go back to being a cashless economy, albeit a more efficient one that is not based on barter and gift economics, but allows us fast, safe and convenient transactions.

‘We already carry our phones and our wallets wherever we go; why not use the telephone device and other smart cards as the medium of financial transactions, for the efficiencies we get from the ability to transfer money seamlessly, pay our bills and purchase goods and services without having to carry money around?’

 

Finally, he stated that Mobile Operators will facilitate each of these transactions directly or indirectly. Mobile Payments actually promotes financial inclusion. It has great potential to reach entirely new segments. Its lower costs make it profitable to serve poorer clients and no physical outlets make it possible to serve more remote clients.

In Ghana instead of the central bank adopt a policy and allow the banks in the country to take the challenge in handle mobile money; the telecom operators rather are championing it. And it has not been effective because only three operators out of six telecom operators are offering the services and there has been no policy direction with regard to these services. Among the six licensed telecom operators in Ghana, it is only MTN Mobile Money, Tigo Cash and Airtel Money are in operation.

With a clear policy in place, this initiative can be link to the rural banks in the country and it will become a nationwide project like M-PESA from Kenya. These platforms provide cash management solution which offers flexibility, total security and convenience of accessing your money on your mobile phone wherever you are. It offers a fledged bank account on your mobile phone which allows you to easily and safely manage your cash in real time.

With some of the platform you can send and receive money safely, pay your utility bills, TV subscription, buy airtime, pay for goods and services and buy a life insurance. They are currently partners with almost all the banks in Ghana. You can get a bank which is connected to one of these platforms. In total over 4.5 million are having services from these operators. The Mobile Money solution is based on Banking Industry security standards. Accounts are password protected, data is encrypted, user authentication is required, authorization is profile specific, and account holder confidentiality is assured. With these platforms, mobile money wallet opening is made to conform to Know Your Customer (KYC) requirements. The wallet will only be opened by Authorized Mobile Money Merchants.

In order to ensure that Mobile Money transfers are secured, a multiple authentication system is employed by the sender to validate a transfer. This involves the use of the Mobile number, transaction number and Personal Identification Number (PIN). The beneficiary will access the transfer with a unique and own profile. To access his/her wallet a user must authenticate that he/she is the account holder by entering a PIN. After consecutively entering wrong PIN three times (seizures of wrong PIN), the wallet is temporarily blocked. Before a subscriber interacts with a customer service officer, the subscriber will be required to identify himself/herself by answering unique authentication questions or by entering PIN on mobile.

Value proposition is based on four Pillars. They are convenience, accessibility, cost-effectiveness and trust. 

Despite all these positives about mobile money platform in Ghana, it challenges are lack of clear regulatory policies; partner banks involvement and support is low; lack education, awareness and acceptance of this mode of banking; most Ghanaians generally do not carry ID’s. This slows down registrations, especially in the rural areas; and limit on transactions.

Looking ahead we need clear policies as a country in place that would allow the operators to follow a structured advance towards achieving the full benefits of a cashless economy. It also needs Central Bank and the Government support in promoting this on relevant platforms. As a country we need to expand our infrastructure and systems to the point where we are ready for a cashless economy, and electronic transactions are truly ubiquitous and sustainable. The initiators and handlers need to be ensure with adequate security to avoid pitfalls i.e. cyber fraud is critical. Cultural resistance and education endorsement from Central Bank and Government will be of help.

 

Source: Fred Yaw Sarpong

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Rwanda: Electronic Billing Machines – a Boon, Not a Burden

 

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)

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Kenya: The trouble with KRA’s e-filing plans

 

Kenya: The trouble with KRA’s e-filing plans

 

13 June 2013

Kenya: The Kenya Revenue Authority ( KRA) is in the process of moving its tax system from a physical filing platform onto an electronic platform. Under this new system, data will be populated onto Excel templates by taxpayers or their agents, and uploaded onto the KRA database.

While the benefits of adopting an e-filing system are obvious, there are certain challenges that will arise. The major concern is privacy. Who will be able to access the system? How can one ascertain that no other party has access to the files? Are taxpayers’ records safe?

And then there is the technical issue. The level of detail contained on the electronic returns is unnecessary and superfluous, and the shift assumes that taxpayers are technically equipped to navigate through the returns. But the most challenging bit is the amount of time firms will take to complete these returns due to the excessive information that the KRA is asking for. Notwithstanding the system’s imperfections, we should not throw the baby out with the bath water.

A move to iTax is certainly a step in the right direction. That said, the change will not only be in the returns, but also in the mode of making tax payments. KRA is currently widening its reach by increasing the number of banks through which taxpayers can make payments.  Currently, taxpayers have to wait for payment receipts for almost a month to ascertain that their payment was received by the KRA.

Under the proposed system, once a taxpayer makes a payment to the taxman, it will be simultaneously reflected in the KRA system. The taxpayer will then be provided with a slip by the bank cashier showing that the  money has been remitted. The iTax  system is also expected to help improve  KRA’s record-keeping system with regards to filing and payments. It will make it easier to  retrieve evidence of document submission or payment remittance. It is, therefore, foreseeable that iTax will bring with it some merits.

 

Source: Standard Media

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Uganda to tax mobile money transfers

 

Uganda to tax mobile money transfers

 

14 June 2013

Uganda is to impose a 10% tax on cash transfers by mobile phones and other money transfer operators. International remittances from Ugandans living abroad are also affected. Finance Minister Maria Kiwanuka said she also planned to raise $16.5m (£10.6m) by imposing a levy on incoming international phone calls. Ms Kiwanuka had to come up with ways to plug a $214m hole in the annual budget after donors cut aid over accusations of corruption.

The BBC’s Catherine Byaruhanga in the capital, Kampala, says there has been criticism that the budget – presented to parliament on Thursday – will hit poorer Ugandans hardest. Ms Kiwanuka told MPs that in the last year $767m worth of remittances had been received from Ugandans in the diaspora. According to Uganda’s private Daily Monitor newspaper, the new mobile money transfer tax could affect the 8.9 million customers using six mobile phone networks in Uganda. The government hopes to raise $12m annually from the tax, it reports. Mobile money transfers are extremely common in Uganda as many people, especially in rural areas, do not have bank accounts. Transfers are used to send money to relatives and even settle some bills.

“It’s very unfortunate that Ugandans are being squeezed both ways,” Simon Mpagi, a mobile phone money transfer agent, told the Reuters news agency from his retail shop in Kampala.

“They steal our taxes and donor money… leaving public services to near-collapse and now when donors get angry and cut them off, then they come to us and punish us again by raising taxes to grab even the little income we struggle to make.”

 

Phiona Wall, communications manager at mobile phone company Airtel Uganda, said she felt there were contradictions in the budget.

“In telecom we are trying to increase affordability and things like mobile money transfer revolutionised money transaction so when you increase tax, there is a contradiction,” she told Uganda’s state-owned New Vision newspaper.

 

David Holliday, managing director of Uganda Telecom, said the new tax would mean a significant increase in the cost of the service.

“Mobile money has become part of people’s everyday lives because they don’t need to carry cash. Even those who were formally unbanked have mobile money accounts with a service provider of their choice because it’s cheap,” the Daily Monitor quoted him as saying.

 

Ms Kiwanuka said the aim of the budget was to target those who avoid or do not pay taxes and set targets for the revenue authority to make sure taxes are actually collected.

“All the tax proposals that have been mentioned add up to about 3% of existing taxes and they’re still subject to parliamentary approval,” she told the BBC.

“That percentage shows you that really the budget is not about new taxes, it’s about… taxes already due be paid. Collecting the uncollected.”

The UK, Denmark, Ireland and Norway have all suspended some aid to Uganda following allegations that millions of dollars had been transferred from Prime Minister Amama Mbabazi’s office into private accounts.

 

Mr Mbabazi has acknowledged that money has been stolen from his office, but denies any involvement. The stolen money has been returned.

 

Source: BBC

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Kenya: KRA revenue collection grows 13.2pc

 

Kenya: KRA revenue collection grows 13.2pc

 

17 July 2013

The Kenya Revenue Authority (KRA) has announced a 13.2 percent revenue growth of Sh93 billion (overall) and Sh88 billion (Exchequer) in the year 2012/2013 compared to 11.4 percent growth in the previous year.

Kenya Revenue Authority Commissioner General John Njiraini says Medium and Small Taxpayers segment recorded growth of 20.2 percent, while non-oil imports were affected by subdued growth of 3.8 percent in the value of dry imports. Petroleum taxes increased by 8.5 percent at 67,819 in the year 2012/2013 compared to 2.4 percent at 66,251 in 2011/2012 while trade taxes increased by 22.5 percent to 180,353 in 2012/2013 financial year compared to 171,162 in the previous year. Njiraini said that the number of containers landed for home use declined by 1.1 percent from 182,773 in 2011/12 to 179,340 in 2012/13.

“During the financial year we noted shift of import patterns towards goods of low or zero duty tariffs which may manifest mis-declarations of higher duty goods,” he said.

He said that customs services department has instituted measures to address this problem through targeting of goods entered under low or zero tariff.

“Measures include mandatory verification of containerized goods with declared values falling below defined threshold,” he added.

 

Njiraini said that non-enactment of the VAT Bill has negatively impacted domestic VAT with an estimated loss of Sh11 billion. He said that professionals need to debate on this important policy to weigh alternative policy choices that may be used to address social concerns such as cost of living. He said that KRA will champion the elimination of discriminatory tax treatments for products having similar characteristics as this has negative impact on tax performance. Njiraini revealed that the Commissioner of Customs has relocated to Mombasa for the next three months to support both port improvement processes but importantly to address bottlenecks in revenue mobilization.

“The most affected segment is large taxpayers where VAT stood at Sh48.3 billion representing a growth of only 2.8 percent.

 

A project to implement remote transmission of Electronic Tax Registers data has commenced with completion date of December 2013. The process will enable effective monitoring of ETRs to track usage, disconnection and locality, among others. The initiative may also capture data on buyers for the purpose of implementing a customer loyalty programme.

Njiraini revealed that ITax roll out has been concluded and all modules rolled out formal launch expected in early august and mandatory electronic filing will be implemented by September 2013. He also said that mobile payment platform is under development and will roll out by end of July 2013. He also revealed that Kenya was ranked 164th place out of 185 countries in the world in 2013 according to PriceWaterCoopers. On paying taxes, the position worsened from 153 (2011) to 154 (2012).

“Kenya must improve investment climate competitiveness through reform of tax processes,” he said.

 

 

Source: Capital FM, Kenya

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Tanzania: TRA Pushes for Use of Electronic Taxation Gadgets

 

Tanzania: TRA Pushes for Use of Electronic Taxation Gadgets

 

9 July 2013

The Tanzania Revenue Authority (TRA) will embark on an educational programme for Small and Medium Entreprenuers (SMEs) on the importance of using the Electronic Fiscal Devices (EFDs) so they can use them during 38th Dar es Salaam International Trade Fair (DITF) next year. Speaking to Daily News at the 37th DITF, TRA Deputy Director of Finance Ms Rukia Adam said the revenue authority has noted that SMEs were not using the EFD machines.

“It is clear that there is still very little understanding of the importance of using the EFD machines, which apart from assisting the government receive correct amount of revenue, it also helps the business owner keep daily records,” she explained.

 

Ms Adam said it a legal requirement and not by TRA for every business owner to have the EFD machine. She called upon business owners in the country to get the EFD machines launched in May this year, on their own accord, without waiting to be forced by authorities.

“There are some who have willingly to embrace the new system of using EFD, but there are also those who are hesitating, but there is a legal requirement for customer to inquire and get a receipt for goods purchased, so it is for their interests that they get the machines which do produce receipts,” she explained.

 

For foreign businesses participating in the 37th DITF, Ms Adam said there are statistics that show the goods that were brought into the country for the purpose of the trade fair, which will be reconciled by the goods sold, for revenue to be collected.

 

Source: Tanzania Daily News (Dar es Salaam)

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Malawi: Government to Promote Use of Electronic Transactions

 

Malawi: Government to Promote Use of Electronic Transactions

 

1 July 2013

Malawi has announced a commitment to increasing the use of electronic based money services. Malawi’s primary goals in shifting to e-money are to increase transparency, decrease costs, accelerate economic growth, and address poverty by increasing financial inclusion for all Malawians.

“We have tried many different cash payment modalities in Malawi but these have proved both expensive and subject to risk and fraud,” said Minister of Finance Ken Lipenga, whose country will focus its initial phase of the transition on social welfare and salary payments. “Our aim at this point is to begin by reaching 21,000 people with payments of $3 million.”

 

The government has joined the Better Than Cash Alliance, an initiative founded by the Bill & Melinda Gates Foundation, Citi, Ford Foundation, Omidyar Network, USAID, United Nations Capital Development Fund and Visa. It works with governments, the development community and the private sector to adopt the use of electronic payments and provides resources to those who commit to make the transition.

“We commend Malawi on their leadership and commitment to improve the lives of the Malawian people and to further develop the economy of their country,” said Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance. “There are many benefits of electronic payments but also challenges and these can best be tackled in partnerships. We welcome Malawi into the Better Than Cash Alliance and look forward to our partnership with them.”

 

Source: Cellular News

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Zimbabwe: Mobile, Internet Money Surpass Card Payments

 

Zimbabwe: Mobile, Internet Money Surpass Card Payments

 

19 July 2013

MOBILE and internet-based transactions have for the first time surpassed card payments after registering a 28,3% growth in the month of May as more account holders turn to the convenience of mobile banking.

According to the Reserve Bank of Zimbabwe (RBZ)’s May 2013 monthly economic review, the value of mobile and internet-based transactions rose from US$283,6 million in April to US$364 million in May 2013, while the total value of card-based transactions rose by 1,3% from US$328,2 million in April to US$332,6 million in May 2013. Many banks moved towards internet and mobile banking after government said banks should, effective January this year, not levy fees on deposits of less than US$800 and give 4% interest on deposits of at least US$1 000 held over 30 days.

This resulted in an outcry by banks who had been earning most of their income from fees and commisions.

The biggest mobile banking product on the market is Econet Wireless’ EcoCash with more than 1,7 million subscribers as of December 2012 and expects to push in more than US$1 billion on its platform in the 12 months to August 2013. EcoCash allows people to send money to each other from cellphones and to collect the cash from a network of about 3 000 agents. The mobile operator integrated the system through various major banks which include CBZ Bank, Steward Bank and Stanbic Bank. His has allowed those with existing bank accounts to move money in and out of banks without entering a banking hall.

EcoCash has also facilitated provision of banking services to millions of people who until now were outside the banking system. Telecel discontinued its mobile money service in 2011 but subscribers can still access mobile banking through a ZimSwitch platform run by another company while Net One’s mobile money transfer service, One Wallet, has proved to be a success. Earlier this year, FBC Holdings also entered the fray with the planned expansion of its own mobile banking product, Mobile Moola. In an overall comment, the RBZ said the national payment systems continued to exhibit stability and resilience during the period under review.

“With the exception of cheques, most payment streams registered increases during the month of May 2013, in both volume and value terms,” the Central Bank said.

 

In value terms, cheque transactions decreased by 7,2%, from US$16,6 million in April 2013 to US$15,4 million in May 2013. The value of transactions processed through Zimbabwe Electronic Transfer Settlement System (ZETSS) in May 2013 increased by 10,7% to US$3,91 billion compared to US$3,54 billion in April 2013. In terms of volumes, transactions registered on the ZETSS increased by 18% from 182 865 to 215 199 during the same period.

Going forward, the RBZ said its goal is to ensure payment systems are available without interruption, meet all users’ needs, and operate at minimum risk and reasonable cost.

“As such, the central bank will continue to deepen its role through increased monitoring and collaboration with various stakeholders in order to maintain safety, soundness and stability in of the payment systems,” the RBZ added.

 

Source: Zimbabwe Independent