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Article discusses the concept of VAT cashback and its implementation in various countries. It provides a comprehensive overview of the motivation tools and conditions for receiving VAT refunds in Azerbaijan, Uzbekistan, Mongolia, and Kyrgyz Republic. Additionally, it outlines the Digital Tax Technologies solution for motivating consumers to demand receipts from retailers.
The article provides a comprehensive overview of key VAT fraud methods and different generations of VAT administration systems. It also introduces the concept of the 5th generation of VAT administration systems.
TRS is a comprehensive tax administration solution that helps tax authorities improve revenue collection and compliance through the modernization and automation of tax processes. Tax Revenue Suite (TRS) identifies VAT gaps by comparing data from tax returns, invoices, and payment accounts for tax obligations.
The concept of the "tax gap" has been widely studied and discussed by various nations and institutions to measure tax compliance. However, due to the complexity of tax gap measurement and the diversity of tax gap classification methods, its definition may vary significantly across sources. In this article, we provide a variety of tax gap definitions and describe the most popular methods that are applied to the VAT gap, and used by such institutions as the European Commission, International Monetary Fund, the UK His Majesty Revenue and Customs (HMRC), and the United States Agency for International Development (USAID).
Virtual VAT control accounts integrate the benefits of VAT control accounts with the conventional accrual-based VAT administration system without freezing taxpayers' money.
The solution's functional architecture for the digital administration of VAT and other indirect taxes, e.g., sales tax, goods, and services tax, may include two major blocks: 1. Administering the transactions be-tween legal entities who are VAT payers with so-called Business-to-Business (B2B) Tax Invoices. 2. Ensuring the completeness of reve-nue invoices in transactions with the private individuals, i.e., for the inter-action of legal entities who are VAT payers (retail sellers) with the private individuals who are not VAT payers (consumers) with Business-to-Consumers (B2C) Tax Invoices.
In this article, we will go over the key aspects of how tax authorities can digitally administer the value-added tax (VAT), sales tax, the goods and services tax (GST), and other indirect taxes. Let us analyze them based on the example of VAT.
Implementation of OECRs (Online Electronic Cash Register) and DTT’s Digital VAT Administration solution for B2C supports fiscalization and retail tax administration in near real-time. DTT has considerable experience in implementing Digital Tax Administration Systems for VAT, GST, and other taxes for B2C and B2B in several countries around the world. Implementing the digital administration of VAT and other taxes for B2C taxpayers can increase tax revenue collection from retailers by up to 150% and boost consumer demand for legitimate fiscal receipts.
When introducing Online Electronic Cash Registers (OECRs), the state expects that all retailers will use them in accordance with the established requirements. But there is always would be possible to find retailers who work completely without OECRs or who acquire it, but never use, or use it not for every sale. Based on our practical experience of implementing online fiscalization in different countries, we will share some methods that have proven their efficiency to ensure a proper use of OECRs.
The introduction of the Electronic Online Cash Registers (OECRs) 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?
Creation of VAT evasion schemes pursues several goals: 1. To move money out of the legal field. 2. With the help of fictitious schemes to optimize the taxable base and receive tax deductions and refunds. 3. To conceal the withdrawn funds from the control of tax or other regulatory authorities for their subsequent free use without paying taxes. How can tax authorities to counter VAT evasion methods?
States cannot abandon the concept of the fiscal receipt. This seems to be the only way to ensure the completeness of retail revenue accounting. But it is possible to opt-out paper receipts and switch to their electronic versions.
Tax authorities often see a transition from business or tax invoices (VAT, GST, and Sales Tax invoices) to submission of electronic forms as a fundamental tax administration project that will increase tax collections and narrow the tax gap.
Value-added tax (VAT) is a consumption tax on goods and services that is levied at each stage of the supply chain where value is added, from initial production to the point of sale. VAT also presents the enormous potential for evasion via the organized fraud. It alters collection of the corporate income tax, since the reduction in VAT base achieved via bogus expenses. VAT fraud alone creates in EU a tax gap of 60 billion euros annually according to Europol. Therefore, the fight against VAT fraud is one of the most important tasks for the states and the tax administrations.
Many governments think about implementing online fiscalization systems for regulating B2C taxpayers. It is difficult to control the retail sales of products and services to consumers in terms of taxation. The tax administration of B2C segments is extremely difficult because there are many cash payments, numerous objects of control, and an enormous number of transactions. At the same time, small and medium-sized businesses contribute significantly to the economy and to the state's tax collection. Implementation of online fiscalization systems is a helpful solution for the country, as it not only leads to increased tax collection but also reduces the share of shadow economy and creates fair competition for retail business.
Implementation of online fiscalization projects is a complex and challenging task, because they affect not only considerable number of retail taxpayers, but also their buyers—citizens of the country. Consequently, governments should entail complex efforts to achieve the project’s objectives, including reducing the share of the shadow economy and increasing a tax collections.