How to Ensure the Use of Online Electronic Cash Registers

Table of Contents

The Importance of Controlling the Use of Cash Registers

When introducing Online Electronic Cash Registers (OECRs), the state expects that all retailers will use them under the established requirements. There are two aspects to the application of OECRs:

The taxpayer acquires OECR to comply with the law.
The taxpayer uses the cash register and issues cash receipts to the buyer for each sale.

However, it is always possible to encounter retailers who either operate entirely without using OECRs or who purchase them but never use them or use them not for every sale.

When organizing control work on the use of OECRs, tax authorities also should consider such an unpleasant factor as local corruption—the actions of employees of regional tax authorities who “sell” taxpayers the opportunity to work without the use of OECRs. Therefore, it is necessary to organize the control work without the participation of local inspectors.

It is vital to ensure the inevitability of punishment for non-compliance with the compulsory use of cash registers, so that the example of a “neighbor shop” who ignores the law without any negative consequences does not become a “role model” for responsible taxpayers.

Based on our practical experience of implementing online electronic cash registers in different countries, we will share some methods that have proven their efficiency to ensure a proper use of OECRs.

Best Practices for Organizing Control of Retailers That Do Not Use Cash Registers

Using Geographic Information Systems to Identify Retailers

Many geographic information systems reflect information about the location of retail outlets. This is a marketing ploy aimed at attracting the attention of the buyer and helping to quickly find the store. An example is Google Maps and other popular systems.

To organize the work of tax authorities with such resources, it is necessary to collaborate with their owners and get registers of points of sales indicating the type of activity and geographical coordinates.

Using Internet Search to Identify Active Retailers

An effective way to identify the fact of the sale of goods and services is to monitor the Internet space. Retailers search for customers over the internet, create landing pages and websites, posting information in online catalogs, using various advertising channels in the form of context, banner, and media advertising.

Examining recent customer reviews of retail points of sales may provide a clue whatever they are conducting a live business. To work with such a huge array of information, it is necessary to develop your own search engines, which using special algorithms, will collect information from relevant sites, catalogs, and advertisements, generating an up-to-date database of open outlets.

Using Information from Telecommunications Companies

According to the geolocation data available to telecommunications operators, we can accurately determine the places of mass gathering of people. Usually, that indicates the presence of retailers.

Using Data from Local Authorities

The study of information on issued trade licenses will help to form a pool of potential taxpayers who must use OECRs.

Using Information from Banks about Acquiring Terminals

Today the availability of an acquiring terminal for accepting non-cash payments is a crucial factor for the success of retailers if they do not want to lose customers due to lack of cash. Usually, a bank registers an acquiring terminal for its clients, who have previously passed the identification procedure. This suggests that a taxpayer who uses an acquiring terminal must also use a cash register.

Use of Data on Operating Account Transactions

Another way to identify acquiring payment recipients is to extract the encoded acquiring data from the payment destination. If the taxpayer uses Internet acquiring or acquiring terminals, then the use of OECRs is mandatory as well.

These initiatives require changes in legislation, but without them it is impossible to ensure regular monitoring and collection of information on taxpayers who must use OECRs. Comparison of the collected data with the list of OECRs registered with tax authorities makes it possible to form a list of those retail facilities that evade compliance with the requirements of the law.

Field Work of Tax Authorities

From time to time, we recommend engaging tax inspectors and local authorities to conduct mystery shopping activities. Such field work requires an action plan, a schedule, and additional employees.

Controlling the Improper Use of Cash Registers

Now we need to talk about what to do if retailers have OECRs, but do not use it as required. The following methods can help.

Monitoring of “Silent Cash Registers”

The taxpayers, especially a large one, may have so-called “replacement cash registers”, which they use in case of failure of the main OECR. But this rule rarely works for micro and small businesses. If we see a cluster of buyers at the location of an entrepreneur, we see the activity of other taxpayers nearby, then we can conclude that the “silent taxpayer” is out of business, or it does not use cash registers and does not issue cash receipts.

Monitoring by Analogy

If we can group taxpayers by type of activity and by size (turnover), then we can compare taxpayers with similar characteristics, identifying leaders in terms of frequency of use of OECRs, and those who do not use it properly.

Analysis of Cash Receipts and Bank Accounts (Reverse Comparison)

If we analyze cash receipts with a non-cash type of payment and check whether the taxpayer has a bank account and acquiring transactions, then the absence of the latter in most cases indicates not just the non-use of cash registers, but a deliberate tax evasion.

Analysis of Merchants’ Acquiring Data

If tax inspectors have access to transactions on the taxpayer’s bank account, then they can receive information on acquiring, compare it with fiscal data on OECRs and identify the difference.

Motivating the Buyer to Demand a Cash Receipt

Additionally, it is necessary to talk about the importance of motivating the buyer to demand a cash receipt and participate in monitoring the use of OECRs by the seller. If no cash receipt is issued, this means the absence of a cash register or the unwillingness of the seller to register the transaction.

The seller must install and use cash registers if the buyer demands a cash receipt and will not buy if seller refuses to do so. The buyer may want to request a cash receipt for the following reasons.

Convenient Access to Receipts in Case of Returns or Warranty Claims

If the buyer has an ID and access to the cloud storage, there is an option to scan, send and save the receipt in the cloud or on mobile application. The buyer can use the cash receipts to confirm the fact of purchase in case of returning the goods or contacting the service center for a warranty case.

Receiving Bonuses and Rewards

Consumer goods manufacturers and service providers can integrate their loyalty systems with the tax receipt storage system and offer consumers numerous benefits for making specific purchases. Such cooperation is also beneficial for tax authorities because the buyer receives bonuses for scanning and checking the receipt from the business, and not at the expense of the state.

Participating in Lotteries

There is the possibility of engaging buyers in the state lottery by entering receipt number. Tax authorities have limited resources to promote this activity among the target audience. It is difficult for them to organize regular activities and provide an attractive prize fund without the involvement of commercial structures. Therefore, it is necessary to think about how to properly link the resources of commercial organizations with the state receipt lottery, converting.

Using Receipts to Get Deductions

If the country has social and property credits, it makes sense to link them with receipts. This will increase the incentive for buyers to demand a fiscal document from sellers. Expanding the possibility of obtaining tax credits, on the one hand, will lead to additional costs from the budget, but on the other hand, this measure will help increase the tax base of sellers and, therefore, increase the revenue for the budget.

The tax administration can apply unconditional and conditional deduction for each registered legal receipt. This will involve the maximum number of buyers in controlling the use of online cash registers.

Feedback from Consumers

You need to provide buyers with the opportunity to file complaints about the non-issuance of a cash receipt. The buyer must get the simplest way to send this information. Consider two main factors when organizing such feedback:

The state must provide feedback to the buyer in the process of processing the complaint. The buyer should understand that information on the violation has not fallen into a “black hole” and supervisory authorities will pay the attention.
The state should motivate the buyer to file complaints. As one of the measures, it is possible to consider paying the buyer a share of the amount of fines collected from the seller for non-use of OECRs.

Ensuring the use of cash registers is a complex regulatory, organizational, and technical task. Without solving its challenges implementation of the online cash registers will become an additional burden on conscientious taxpayers and will not bring any benefit to the state.

Online Electronic Cash Registers Management System

Development of the comprehensive digital management system must accompany the introduction of online cash registers.

The primary objectives of this infrastructure will be supporting of the proper revenue accounting, reflection of the tax base and, consequently, increasing the tax revenue. It should include the following components:

The fiscal data processing system is responsible for receiving and processing of the fiscal data, as well as for detecting errors.
Taxpayer’s revenue calculation system working with the fiscal data.
The tax base calculation system to pre-filling tax returns and/or comparing data from tax returns with the taxpayer’s revenue.
The taxpayer communication system for notifying them about detected violations and calculated taxable income.