TRA: Buses to have EFDs too–but later

 

April 2013

The Tanzania Revenue Authority has said it is collaborating with several other stakeholders including the Surface and Marine Transport Regulatory Authority (Sumatra) in implementing the use of electronic fiscal devices (EFDs). In a note emailed to this paper yesterday, the agency said they were jointly engaged in overseeing the proper administration of the transport sector in the country.

“Police deal with entire enforcement of the regime to ensure that the transportation of people and goods is safe, fair, simple and transparent,” it added, clarifying a front-page news story published in yesterday’s issue of this paper.

The agency said the idea was not merely to install EFDs in commuter buses so as to arrest overcharging of unsuspected travellers as the actual fare would be recorded. The plan has nothing to do with control of transportation costs, high fares prices and neither will the use of the devices necessarily provide relief to travellers as such, it added.

“However, the use of EFDs as a tool to capture sales will ensure that everybody is provided with an EFD receipt to provide assurance to a passenger that the right receipt is issued, tax contributions to the government have been made and the owner of the bus pays the right tax based on sales generated from the machines,” it elaborated.

 

TRA director of Education and Taxpayer Services Richard Kayombo said in later remarks to this paper that the current (second) phase of the use of EFDs, which takes effect mid next month and is meant to cover 200,000 entrepreneurs, would not involve commuter bus transportation – “but that time will finally come”.

TRA assistant commissioner (Domestic Revenue) Generose Bateyunga and principal taxpayer education officer Hamisi Lupenja stressed during talks with editors in Dar es Salaam earlier this month that the agency was determined to ensure that all people supposed to pay tax are identified and reached and actually pay correctly assessed amounts

They underlined the need for TRA to cast the tax net much wider than is now the case, which would mean diversifying sources of revenue instead of targeting only traditional ones such as are found in the formal sector, alongside gradually and strategically plugging notorious loopholes. The officials explained that EFDs were assets ensuring fairness and transparency in tax assessment as well improvement in the compilation of business records while minimising pilferage, maximising profits, and ultimately raising VAT revenue collections.

 

Source: ibn-tv

Rwanda: Supplement – RRA Experts Answer Questions About Electronic Billing Machines

 

28 APRIL 2013

INTERVIEW

Rwanda has introduced legislation which will help businesses to keep their books properly and also improve tax compliance. The new law is also specifically designed to stop tax evasion and starting this year, every business registered for VAT must provide a customer with certified receipt for every sold good or service.

This will require businesses to install an Electronic Billing Machine (EBM), which keeps records of all the sales. It comprises of two components, a Certified Invoicing System (CIS) and a Sales Data Controller (SDC). The groups of taxpayers which must have the device installed will be announced by public notice, as installation will be carried out in phases.

By end of each phase, this law will apply to every business registered in Rwanda, including every newly registered taxpayer.

The Rwanda Focus talked to Goran Todorov, an EBM consultant hired by RRA, and Charles Kabera, RRA’s head of Risk Management Division in the Domestic Tax Department, who are overseeing the EMB project, to answer questions that taxpayers might have.

 

Which taxpayers are the EBMs targeting and under which legal mandate?

The EBM initiative is meant to help RRA boast its domestic tax collections and it targets all registered VAT taxpayers, a list of whom we have.

As for the legal mandate for this, reference is made to article 24 of law n° 37/2012 of 09/11/2012 establishing the value added tax which states that ‘Value added tax registered persons are obliged to use a certified electronic billing machine that generates invoices indicating the tax as agreed by the tax administration’.

There are over 7000 VAT registered persons/businesses with the RRA and all these will be required to operate with the EBMs.

How exactly are these EBMs supposed to work?

The Sales Data Controller (SDC) is a small electronic device connected to the taxpayer’s Invoicing system. The SDC records every transaction printed by Certified Invoicing System (CIS) which ensures that every printed certified receipt contains a special electronic signature obtained from SDC in the approved format. The SDC itself is tested and accredited by RRA to be secure and tamper-proof. Rwanda Revenue Authority auditors can access any SDC and quickly detect any missing taxes.

Summary on EBMs

• All registered VAT taxpayers are required by the VAT law to install EBMs.
• RRA has given out 500 EBMs under a pilot project to help kickstart their introduction.
• The RRA commissioner General will announce dates and phases in which all other VAT taxpayers will be required to acquire and install EBMs in their businesses.
• The EBMs will help RRA increase efficiency in collecting more taxes to help in the growth of our country.
• RRA is creating awareness on the use of EBMs to ensure taxpayers are not found on the wrong side of the law.
• RRA will issue a check list which will guide both suppliers and users on the right specifications of the EBM to buy.
• If you are a registered VAT taxpayer and plan to acquire an EBM, seek help from your nearby RRA office on the process and what you need.
• Once you have the EBM, ensure it’s working well so that all sales reports are filed. Also teach all sales staff on how to operate the EBMs.
• Countries that have used EBMs have registered massive success in tax collection, Rwanda can succeed as well.
• Customers should henceforth demand an EBM printed receipt whenever they pay for goods or services.

What should taxpayers who already have some form of invoicing system do?

We know there are many in this case but they needn’t worry because EBMs are designed to suite every business environment. However if a taxpayer already owns an invoice processing equipment, they must make sure that their system is compatible with new RRA requirements, as soon as possible.

The requirements and the testing method are provided by RRA.

If taxpayer already has a new invoicing system that meets all the required specifications of RRA, he must check that his agents/business outlets elsewhere are on top of these changes as well and plan to roll out an upgrade in time to comply with EBM rules. Some agents may be reluctant to comply, or even give up on the Rwanda market altogether. The fact is a taxpayer doesn’t want to be vulnerable to fines and penalties from RRA just because a vendor doesn’t want to do the upgrade.

How does the taxpayer find the right Electronic Billing Machine?

Based on other countries experiences which have rolled out similar invoicing regulations, it has proven difficult for the market to get certified systems on time. For this reason, Rwanda Revenue Authority has eased up on the requirements and decided to roll out implementation in phases.

All Electronic Billing Machines must be certified. This means that it is necessary to have a Certified Invoicing System (CIS) and Sales Data Controller (SDC). The RRA is developing a certificate checklist which taxpayers will use as reference to guide them in identifying the devises of their choice.

Also note that the EBMs may come in different versions or types as made or developed by a different manufacturer; that is not a problem, what is important is that whichever model you choose, it must meet the specifications provided by RRA to ensure it is compatible with the reporting system. To ensure that taxpayers buy the right EBM devices, RRA is working closely with the private sector and has already trained members of the ICT chamber which has ICT equipment suppliers, software developers and other traders who might want to supply the market, these are already aware of the requirements and will help taxpayers get along.

Taxpayers can also visit the RRA website where a specially developed page on EBMs has been added which is regularly updated with developments on this project; all are advised to visit www.rra.gov.rw for details. If taxpayer is still not sure who is authorized supplier, our call center will provide consultations, just dial 3004.

How will the use of EBMs by VAT-registered taxpayers benefit all involved?

The use of EBMs is of great importance to the taxpayer, the consumer and the country/government at large.

To the taxpayer:

• The system provides a tailor-made book keeping solution where once every sale detail is filed in the device, the data are recorded on the system and immediately communicated to the RRA system.
• The EBMs will help the taxpayer to be a better tax complier and help in steering the growth of our country.
• The EBMs will promote fair competition on the market. Where in the past some enterprises evaded taxes hence earning illegal profits, the system will ensure everyone earns his due and pays what belongs to the government hence promoting fairness. It will also reduce financial embezzlement in businesses, corruption and other malpractices business owners tend to suffer in their absence.

To the consumer:

• Citizens will, thanks to these secure devices, know exactly how much they paid for goods or service and tax burden will be clearly justified. It’s therefore paramount for consumers to insist on a receipt for whatever good or service. All receipts produced have a special electronic signature which can be verified by RRA or the consumer. This again ensures transparency.
• To encourage this receipt practice among consumers, RRA will introduce a competition where citizens with the biggest number of locally issued receipts get rewarded. If you demand a receipt it means the seller will have to use the EBM to issue one, it also means the VAT tax, which is compulsory anyway, is deducted, it means as a citizen, you have contributed to national treasury hence growth.

To RRA:

• Domestic taxes are important sources of revenue to any country. It’s from these taxes that the government gets money to provide its citizens with public goods and services such as security, health, salaries to government workers and many others. The bigger our domestic tax base, the better our chances of becoming financially independent and reduce on donor aid. While we have thousands of good compliant and honest taxpayers, there are those who are also determined to evade taxes hence leaving the tax burden on a few.
• The successful implementation of EBMs will help us curb VAT tax evasion and increase our domestic tax collection by a good percentage.
• The system will also improve the relationship between taxpayers and RRA as the tax sales reporting will be straight forward as well as tax deductions.
• Finally, it will reduce RRA’s overhead cost of sending dozens of auditors to the field to track down taxes, this will become less expensive.

You can help us achieve all these by cooperating.

 

Source: Rwanda Focus (Kigali)

Successful implementation of EFDs

 

14 July 2015

Electronic tax administration is claimed to improve tax compliance and collection. A number of countries worldwide have thus made the transition from paper-based to electronic methods. In their paper on the impact of Electronic Fiscal Devices (EFDs) on taxpayer compliance and administrative efficiency, Peter Casey and Patricio Castro analyze the possible reasons why the implementation of such devices has not yielded the expected results in some countries.

In Greece, Tanzania and Kenya, for instance, compliance problems seem to be the reason for these mixed results. In Greece particularly, traders simply choose not to use the EFDs or find ways to tamper with the data. In Kenya, they complain about the high purchase price of the devices and about the inadequacy of the support and maintenance services. But the issue all three countries seem to have in common is the lack of an effective compliance monitoring and support strategy.

In other parts of the world, on the other hand, EFDs have received glowing reports from the authorities. Revenu Québec, the tax authority of the Canadian province, reported impressive results following the implementation of the Resto Project. This initiative aims at curbing tax fraud in the restaurant industry by imposing the use of sophisticated sales-recording modules (SRMs).

Implemented from 2008 to 2011, the Resto Project allowed the government of Quebec to collect in excess of $160 million, or $60 million more than expected, between 2011 and 2012. By way of comparison, in 2008 and 2009, the tax leakage in the catering industry was estimated at $425 million annually. Furthermore, projections indicate that by 2018-2019, Revenu Québec will have recovered a total of $2.4 billion in consumption taxes and income taxes that would otherwise have remained unpaid by restaurant owners. In addition to the recovered revenue, the Resto Project cut inspection costs by 96%, and the duration of inspections from 70 to 3 hours.

So what did Revenu Quebec do differently to achieve such remarkable results? According to the authority’s official report^[1], the key success factor was the establishment of a relationship of trust with the restaurant owners. Revenu Québec endeavored to minimize the repercussions the project might have had on their business. Looking back at the Greek, Kenyan and Tanzanian examples, it seems fair to argue that the EFDs would have been more readily accepted by the taxpayers if the tax authorities had provided them with the same level of support.

The approach of Avatar Technologies, a company founded by Global Voice Group (GVG), to the monitoring of tax compliance is similar to that of Revenu Québec. Avatar seeks to win over the taxpayers by making compliance easy, affordable and rewarding for them. The taxpayers who make use of Avatar Technologies’ EFD solution benefit from 24/7 in-country customer support and are given free access to several value-added services, such as AvatarBooks^TM, a fiscally compliant accounting and tax management application.

But what gives Avatar Technologies’ EFD solution the edge is crowdsourcing. Unlike other solutions, it involves the consumers in the compliance process by rewarding those who make a point of claiming their tax invoice. A Fiscal Lottery program was integrated into the solution specifically to serve this purpose. Avatar therefore takes a holistic approach to tax compliance, which takes into account both the technological and human aspects.

 

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

[1] The Resto Project – Mandatory Billing in the Restaurant Sector, Revenu Québec, May 2012

Tanzania: TRA now introduces prize to make traders use EFDs

 

3 May 2013

Tanzania Revenue Authority (TRA) yesterday introduced ‘a car prize’ promotion to encourage traders to use Electronic Fiscal Display (EFDs) machines in their businesses.

“To encourage traders to use the devices, we have introduced this lottery,” TRA Assistant Education Officer Hamis Lupenja told reporters.

He said that traders qualified to join the lottery are those who collect pay more taxes to the authority.

“They will have the chance to win this prize in return. This is to increase the number of EFDs users in businesses in the country”, he said.

TRA Tax Service and Education Officer Alvera Ndabagoye said customers who will buy products from traders without demanding receipts would be punished.

“Any person who’ll be found with goods without a receipt will pay 1,000,000/- as fine.”

Ndabagoye said traders must put the EFDs machines on a visible place for customers to see.

 

SOURCE: THE GUARDIAN

Supplement: Electronic Billing Machines and their legal framework

 

7 May 2013

Rwanda Revenue Authority

In accordance with the new law on value-added tax, all VAT-registered businesses in the country will have to adopt a new transaction registration system based on Electronic Billing Machines.

In a first phase of the implementation of the new system, RRA has allocated the EBM system to 500 selected enterprises in the areas of Nyabugogo, Muhima and Kigali city center. These were taxpayers who did not have any form of electronic receipting systems and RRA chose them to help them to adjust to the new regulations.

While most of the recipients have cooperated, a few of them have complained that the system was imposed upon them. That is rather surprising, considering that the law requires that all VAT-registered companies will have to use the system, and that these 500 taxpayers received the system for free, while others will have to acquire it themselves.

“Inasmuch as we collect taxes for our country’s development, we do so through proper legal frameworks,” says Charles Kabera, RRA’s head of Risk Management Division in the Domestic Tax Department who is also the EBM project manager. “While failure to comply with tax laws can result in penalties, at RRA we believe we can avoid this by developing a mutual understanding with our taxpayers.”

 

The new VAT law

The adoption of EBMs draws its legal mandate from the new VAT law published in the Official Gazette of 05/02/2013 as Law N°37/2012 OF 09/11/2012 establishing Value Added Tax.

The law’s article 1 explains its purpose as being to establish the value added tax on supplies of goods and services in Rwanda as well as on imported goods and services from outside Rwanda.

Article 3 mandates RRA to deduct VAT from all taxable goods and services as well as taxable imported goods and services. However, the law requires RRA to compute the amount of VAT charged on taxable goods and services or imported goods and services by applying the rate specified by law to the value of the goods/services being taxed.

In Rwanda, RRA charges a rate of 18% on all taxable goods and services, although some goods or services are zero-rated or exempted from VAT (see sidebar).

According to the law, VATon the taxable goods or services produced within Rwanda is paid to the Commissioner General (RRA) by the taxpayer who supplied goods or services while VAT on imported goods or services is paid by the importer.

RRA maintains an up-dated list of all registered VAT payers in the country complete with their locations.

 

Challenges faced by RRA in collecting VAT

While there are over 7000 VAT-registered taxpayers in the country, the business of redeeming taxes from them is not easy.

Robert Mugabe, RRA’s Director of Revenue Protection explains that while there are many compliant taxpayers in the country, there are also a good number who don’t comply and are always looking for new ways of evading taxes.

This has serious consequences:

• Loss of domestic tax revenue by the government.
• Increased cost of tax collection which hurts projected revenue earnings.
• Unfair competition where those who evade taxes make bigger profits than those who comply.
• Habits of tax evasion lead to hostility between RRA and some tax payers, this is not necessary.
• Consumer exploitation as their contribution through VAT inclusive prices is retained by dishonest and evasive taxpayers.

To reduce tax evasion and fraud as much as possible, the government examined various possible mechanisms and finally opted for the electronic billing machines, an approach that has succeeded elsewhere such as in Tanzania and Kenya.

Article 24 of the VAT law states that ‘Value added tax registered persons are obliged to use a certified electronic billing machine that generates invoices indicating the tax as agreed by the tax administration’.

 

Responsibilities of the VAT registered taxpayer

As a taxpayer, you can help RRA reduce on its cost of collecting VAT by complying with all tax laws.

• Taxes are for national development as they help the government fund provision of public services such as security, education as well as help on reducing donor dependence. As a taxpayer, you can help by being patriotic and honest through meeting all your VAT obligations.
• You can buy and install the EBM at all your points of sale (Pos) as required by law.
• Once you have bought the EBM machines meeting the RRA requirements, make sure they are working and recording data properly.
• Ensure that you issue an electronic generated receipt generated by the EBM complete with all the sales details.
• Ensure that all sales transactions are recorded on the EBM machines certified by RRA as required by law.

 

Responsibilities of the consumer

Every consumer has a responsibility to make sure the VAT charged on the goods/services they pay for, is delivered to RRA in accordance with the law.

• As a consumer, insist on an electronically generated receipt for every purchase. If a vendor refuses to issue you a receipt, return the goods and don’t pay.
• Report to RRA’s toll free numbers anyone who refuses to issue electronic receipts.
• Be a responsible citizen by ensuring your tax contribution is well accounted for by getting receipts for all your purchases.

 

Advantages for all

If we all encourage the use of EBM machines, RRA will find collecting VAT much easier, and will also reduce its overhead cost and the resulting resources would be used in the nation’s development.

To the tax payer, you will have fewer visits from RRA at your businesses which are normally an inconvenience to you. EBMs will enable RRA to look at your books of accounts from a distance.

To the consumer, having legal receipts for all your purchases protects you legally as they are evidence that you own the goods legally. By insisting on a receipt, you will also be helping to safeguard our tax revenues.

Finally to the government, more taxes means more revenues which in turn means better public services, improved efficiency as well as reduced donor dependency, a key factor for national pride.

 

Source: The Rwanda Focus

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 AvatarBooks^TM. AvatarBooks^TM 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

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)

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)

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

Tanzania: Tax Compliance Assured As EFDs Come Into Effect

 

1 January 2014

The regulation that requires all business people with an annual turnover of above 14m/- to instal an Electronic Fiscal Device (EFD) comes into effect today. Non-compliers by February 1, 2014 risk prosecution and a maximum one-year jail sentence. Acting Finance Minister Saada Mkuya Salum said in Dar es Salaam that the December 31, 2013 deadline is over and that those resisting the new government move risk being penalised. She cautioned business people who are still planning to boycott use of the devices that in doing so they will be violating the law and may also be prosecuted.

“We are through with bargaining and sensitisation. Now it’s time for action,” Ms Salum said as businesses in Mwanza reportedly closed shops protesting the EFD introduction.

 

She said effective February 1, defaulters will be given 14 and seven days of grace period before a penalty of 5-10 per cent is imposed on gross turnover for period starting January 1, 2014.

“I urge business people to cooperate and avoid getting into confrontation with the state,” Ms Salum appealed. Deputy Finance Minister Janet Mbene urged local business people to feel proud of paying taxes, noting that many of them have been making millions of shillings in profit while never paying taxes. 

“We should reduce the burden of workers who seem to be the only main taxpayers,” Ms Mbene said. She hoped that the EFD machines will eliminate tax evasion and corruption, which has denied both the Treasury and the public revenue and public development project financing respectively. Those who want more time for sensitisation are just playing with time; why don’t people need sensitisation on how to use modern telecommunications gadgets such as iPads, android phones, etc,” Ms Mbene, who is on holiday, inquired.

 

She urged the public to rally behind the government’s initiative, which will not only help speed up development but also wean the country from donor dependence.
 
The Treasury had earlier pushed back the deadline for EFD introduction for businesses with over 14m/- turnover from November 15 to December 1, 2013. It also reduced the price of the gadgets from 800,000/- to between 600,000/- and 778,377/- each, according to brand model and capacity. The EFD gadgets, which were introduced in 2010 targeting traders with a turnover of 40m/- per annum, have so far been sold to close to 17,000 traders with an annual turnover of not less than 14m/-.

According to the authority, EFDs bear a fiscal seal, have special inbuilt Read Only Memory (ROM) and incorporate fiscal memory that cannot be erased by use of electromagnetic interface. They also keep 48-hour power back-up and can also use external battery in areas without electricity supply, among some of their unique characteristics. The system aims at allowing the taxman to get correct sales information from business people; reduce tax collection costs and helping business people to comply with the Value Added Tax (VAT) regulations, among others.

 
 
Source: allAfrica