The Goals of Introducing Online Electronic Cash Registers (OECRs)

Challenges of Implementation of Online Electronic Cash Registers

Many countries have introduced online cash registers following the fashion in the tax administration to ensure the completeness of accounting for revenue in settlements with consumers.

The introduction of electronic cash registers comes with an excessive cost to businesses. In addition to installing and supporting new equipment, it is necessary to purchase consumables for issuing fiscal receipts and pay for data transmission to tax authorities. It is quite natural that these initiatives cause resistance from the business.

Imagine the tax officials succeed in overcoming objections, implemented online cash registers, and began to collect the fiscal data.

What should they do next?

Data Quality Control

First, it is important to bear in mind that devices and programs transmit data, and before you do anything with them, you should verify the data quality. That requires the development of requirements towards fiscal data formats, procedures for quality assurance, communication channels, hardware, and software. It is important to correctly set up the process of receiving and processing information by tax authorities: to introduce a procedure for operational control over the flow of fiscal data and ensure work with taxpayers to correct identified errors.

As an example, some tax IT systems after receiving wrong data from a cash register send error notifications to the cashier. But this approach is fundamentally wrong. A cashier does not have the necessary competencies and the ability to do something useful with this notification and correct the data.

If you do not build automatic data quality control, later it will be not possible to generate and use information about the taxpayer’s revenue based on fiscal data coming from online cash registers. Any revenue-related question will bump up against a specific cash receipt and an error that it contains. All work with the taxpayer will be in vain, and such system will lead to the disappointment of taxpayers and tax authorities.

Retail Revenue Recognition Rules

Tax administration should develop clear rules for revenue recognition based on fiscal documents submitted to tax authorities. Each taxpayer using cash registers must understand how authorities calculate taxable revenue and how they form the tax base considering income and expenses for different taxation systems. Often tax authorities do not express their public standpoint in advance, expecting errors or questions from the taxpayer, but without it there are no clear and transparent rules of the game.

Additionally, this will help to prevent the scenario in which the fiscal data operator, who gathers fiscal data and calculates revenue on behalf of the taxpayer, employs techniques that are distinct from all those employed by tax auditors.

If country implemented several fiscal data operators, or an agency scheme, when the agent issues a receipt, but attributes revenue to the principal, the use of the operator’s data becomes impossible. In this case, the only solution is to calculate the revenue on the side of the tax authority and notify the taxpayer on its outcomes.

Digital Tax Returns

If country uses a tax return pre-filling practice, the tax return should automatically register all revenue data.

If the tax system allows not to submit tax returns and automatically calculates the tax based on data received from the taxpayer, then it is necessary to automatically calculate a part of the tax on the taxpayer’s trade transactions.

When the tax system does not use these processes, ensure automatic comparison of tax returns with revenue data from cash registers. If the comparison shows discrepancies the tax system should generate the claim to eliminate identified violations and send it to the taxpayer.

WThe taxpayer must not only confirm receipt and read the claim, but also take actions to eliminate the identified violation within a specified timeframe.