Everything is ready for the official kick off as Data Tech International, along with consortium partners, deployed TaxCore into production on a brand new equipment that will host eFiscalization expecting to receive, validate and store about 15.000.000 transactions on a daily basis.

The list of accredited POS and ESDC solutions has been growing continuously to satisfy demands of all taxpayers who have to transition to the new system by April 30th 2022, thus beginning the fiscalization journey in Serbia.

In a record-breaking implementation period of just five months since the contract signing, we managed to accomplish all expected deliverables and we will continue to support Serbian Tax Administration for continuous operations until the end of 2022.

The post Fiscalization in Serbia – TaxCore @home appeared first on Dti.

Professor Richard Ainsworth of Boston University, an expert on international sales tax collection and fraud prevention, offered an overview of the extent of the problem at the forum on modernizing sales tax collection in NYS held by State Senator Liz Krueger in 2016. According to Ainsworth, New York State loses around a staggering $1.7 billion each year due to electronic sales suppression. “Zapper” software, which allows users to falsify sales receipts, previously came in the form of CDs or USB thumb drives, but increasingly sophisticated software is now available to download online, making it nearly impossible to track down producers. Professor Ainsworth’s written statement can be viewed here.

The zapper Case in Minnesota roots from New York City

Recently, a fraudster from NYC caused a lot of troubles for the Minnesota Department of Revenue. The authorities charged Mr. Hailong Li with manufacturing and providing Sales Suppression devices to businesses, helping them commit tax fraud. They elected this as the first case charged under Minnesota’s electronic sales suppression devices law enacted in 2017.

The specific software called “Happy World” helped business owners modify their sales records, enabling them to reduce the amount of sales tax they owed to the state without leaving one shred of audit trail. And although Mr. Li, the creator of the software, denies ever selling it to people since the law came to force in 2017, the authorities still arrested him due to firm proof that he did just that. He provided his customers with remote support using TeamViewer to log into their terminals and tweak the sales records. During the first investigation of Osaka Duluth, Minnesota Revenue officers seized a flash drive containing Mr. Li’s software program. The authorities discovered Happy World in a second criminal investigation of Shogun Burnsville and the third case of Raku, Inc.

According to this law, (Minnesota Statute: 289A.63.2(b), with reference to 609.03.1), a maximum sentence of 5 years in prison or $10,000 fine. Sometimes, it can be both.

Having firm and harsh laws against tax fraud is a very good way to fight it, however, it is usually not enough. Mr. Li is only one of the people caught red-handed; all over the USA, sales suppression devices and software keep preventing the States from collecting taxes properly. This is further feeding the grey economy, as well as endangering consumers’ rights. If a certain business owner isn’t paying sales taxes, shouldn’t this mean that the prices for the consumers are lower as well? No, it’s not.

How Can TaxCore Help?

TaxCore is not new to the American market. Moreover, it already works in the State of Washington. To be more precise, the State of Washington Department of Revenue has entered into an agreement with well-known restaurants – and its proving to be working effectively.

The authorities caught the owner of the restaurant using a sales suppression software, however, the plea that resulted in an agreement helped TaxCore enter the US market.The business owner accepted the implementation of a monitoring software into their restaurant. Naturally, by breaking the law, the fines were huge. The business owner even had to pay for all the taxes they tried to hide.

The reason why TaxCore was the one chosen as a monitoring system for the restaurant was due to its transparency and flexibility. The owner still had access to the full functionality of the POS, including plug-ins for popular delivery services, while the monitoring in the background is active.

In a developed country such as the USA, there are usually no issues with internet connectivity, which allows for business owners to connect to the Department of Revenue 24/7. This means that with TaxCore, the business digitally signs and directly forwards every single receipt issued to the DOR server.

TaxCore notices discrepancies

This leaves no space for tax and sales fraud because the system detects any discrepancies (e.g., the system will detect sudden gaps in forwarded receipts for a certain amount of time, mismatches with the POS ticket sequences, and similar issues). Even if the internet connection is unstable, using a secure element, TaxCore lets business owners save their receipts until the internet connection is back, without customers noticing because verification service will work regardless of the mode POS is in at the moment.

Moreover, TaxCore’s proof of audit technology can easily disable a business from issuing any receipts at all if the system misses or can’t audit some of them. Additionally, TaxCore’s receipts come with a customer scannable QR code (or in this case, a guest) and can easily report if something doesn’t sit right with them.

Using a taxpayer who committed tax fraud as testing grounds for a pilot project was a very good decision by the State of Washington. It proved that it is possible to educate and correct taxpayers easily, but more importantly, it proved that TaxCore is the perfect system that leaves no space for tax evasion. Years after authorities caught them committing tax fraud, the business owners in Seattle are still using TaxCore and are completely abiding by the law.

The post TaxCore vs Electronic Sales Suppression (ESS) Software appeared first on Dti.

And although this is very much correct, revolutionizing, digitalizing, and modernizing systems that are based on bureaucracy does come with a small price. A price that some businesses are not willing to pay, mostly out of fear. This sounds reasonable – after all, we are used to complicated systems that are often dysfunctional. So even a bare mentioning of importing something new makes taxpayers and business owners resist in fear.

Nobody enjoys drowning in paperwork and documentation, much less going from bureau to bureau only to collect stamps and signatures that are basically irrelevant to the applicant. And that is exactly what TaxCore is all about – making sure that these practices as far as paper journals and archiving remain in the past, and letting technology take care of the rest.

Being Modern Requires Being Modernized First

Every single business has one aim, and that is catering to its target audience. The point is to always offer more and to make it easier for its customers – whoever and wherever they may be. And customers will constantly demand better because they expect the business they put their trust in to be in touch with the advancements of the world.

So naturally, once a certain country makes a decision to revolutionize its tax collection and fiscalization systems, the people involved expect that all the businesses and vendors follow up. Some may perceive it as challenge and some as advantage.

Once Samoa and Fiji decided to team up with Data Tech International and start using our platform, TaxCore, some changes were due. Businesses now must register all their sales points and vendors must go through the accreditation process for assurance that they are electronic sales suppression (ESS) free. Objective is to determine that they follow the fiscalization requirements imposed by the local Tax Authority. Therefore, businesses become qualified and compliant to work in this new environment.

Resistance is inevitable – a handful of businesses tried to find reasoning as to why they should go through accreditation and why it is necessary. This tends to put immense pressure on both the Local Government and Tax Authority.

It is important to mention that abiding by the law when it comes to taxes and fiscalization is not a choice, it is a civic duty, and business owners are no exception when it comes to it.

Is fining taxpayers the way forward?

In 1^st world countries, this almost never presents a problem. Taxpayers who own businesses are well aware of the consequences if they try to resist the fiscalization laws, governments will fine them and their business will suffer.

These fines and just how strict they are depends on the government – whether they are high and unforgiving or more of an educational tool to teach the taxpayers they must abide. Either way, it sets the rules clear; the Tax Authority and the Government define the law, and the citizens abide.

In developing economies, things sometimes take a different turn. In many cases, tax offices in the developing countries often behave as the middleman between the government and taxpayers. It comes off as if the tax offices in these countries are unaware of the authority they present, much less their duty to the country. But, is there a way to motivate businesses to go through accreditation? Fining taxpayers does the trick in some countries, but perhaps other countries can find a different method.

What Do Taxpayers Get from Accreditation?

The method of fining those who don’t abide by the law appears to be working in strong systems that don’t favor. Many developing economies are still in the process of creating such grounds, so perhaps making taxpayers realize how much they get by transferring to the new fiscalization system could help.

So, what is it exactly that business owners get with the new TaxCore system? Well, the benefits are plentiful:

• They will be protected from unfair competition
• The cost of compliance is minimized, as digital audit trail is on the government’s tab
• Eliminates the need for receipts and invoices in paper format, which saves a lot of money
• Management has better insight into business operations preventing classic employee theft
• Promotion of their business through the CCA (Customer Compliance Award) Program

These are only but a few of the many benefits business owners get the moment they make a transition, in many cases seamlessly, to the new system. They can easily cut all the unnecessary money outcomes and have better control of their staff and operations.

How about Vendors?

We would think most businesses would fulfill government requirements the moment specifications are published, as technical changes are not impossible to make. However, it’s the taxpayers who pay for their time, not the government.

In the ECR/POS/ERP industry there are so much diversity and the price ranges go from low to sky rocketing. Sometimes just a change request from a taxpayer would result in astronomical fees for engagement of developers and testers to rollout updates at all sales points. This has prevented some businesses to modernise as they couldn’t keep up with the expenses.

Fiscalization came as an opportunity for some to force updates. Some vendors did this for free because this request to accredit didn’t come from their customers but from the jurisdiction itself where their product is operating. And we expect this as the only way to retain customer, right?

Ethical behaviour vs maximising profits

Failing to comply and go through the accreditation, specifically in countries that operate with TaxCore, results in being unable to develop a business any further. As a business owner, this means losing customers and losing the market to those who complied in time.

Moreover, governments will fine these businesses, and these fines are high enough to present a problem for any business. And if that doesn’t prove to be enough, a business risks being shut down completely, with a jail sentence for the owner(s).

By embracing the new fiscal system, you allow your business to grow and you’re proving your customers their money’s worth. But what is your vendor is dragging feet or asking you for astronomical figure to cough up for upgrade? Firstly you should look at your support and maintenance contract, is there anything in there that obliges your vendor to comply with legislative (tax) requirements? If yes, then this is the case. If not, perhaps you should consider alternative solution and change the vendor.

The post Fiscalization – TaxCore Is Coming appeared first on Dti.

What Exactly Is ESS?

Electronic Sales Suppression is a method which businesses use as a way to manipulate their sales data, resulting in lower taxes. This mostly happens either during or right after a sale has been finalized and it involves manipulating a POS (Point of Sale) so it fails to register all the sales running through it. Doing this is not only illegal and can result in the most severe consequences, but it greatly damages the economy overall.

That is why in 2018, HMRC (Her Majesty’s Revenue and Customs) organized consultations with the most prolific experts within the industry. There was a wide group of stakeholders, businesses, tax professionals, consultants, and anyone with a wide knowledge of tax systems, participating.

The event mimicked a real-life situation where the organizers used a phone application to manipulate electronic sales – which means this app would delete the sales without a single trace. The participants had to find a solution to this burning problem.
Additionally, 13 crucial questions were asked on which participants had to offer a proper answer that would solve the issue:

1: Are you aware of ESS being used to evade taxes in the UK?
2: Are you able to make any estimates of the scale of ESS within your business sector or more generally? For example, are you able to estimate the proportion of businesses you believe may be participating in ESS or the value of sales not properly recorded?
3: Can you suggest any specific measures the government could consider to address ESS?
4: What do you see as the advantages of mandatory software or hardware for businesses which conforms to technical requirements that reduce the opportunity for ESS?
5: What do you see as the disadvantages of mandatory software or hardware for businesses which conforms to technical requirements that reduce the opportunity for ESS?
6: What do you see as the advantages of an encrypted, unalterable and complete transaction log containing details of every transaction and adjustment?
7: What do you see as the disadvantages of an encrypted, unalterable and complete transaction log containing details of every transaction and adjustment?
8: Would an unalterable transaction log be useful for wider business activities?
9: What other technological solutions could help tackle ESS?
10: What challenges should the government take into account in changing its approach to ESS?
11: Is there a role for the public in tackling ESS? If so, what could this role be?
12: How could HMRC and the EPOS industry work together to support businesses and reduce opportunities for tax evasion?
13: Please feel free to submit, alongside your return, any additional information that you feel would be useful to HMRC.

Data Tech International, having the proven experience in the prevention of tax fraud, has answered. We offered a lot of answers and a solution which were welcomed, heard, and very well received. If you’re interested to hear about DTI’s solution to this burning issue in the UK, please let us know by getting in touch with us through our e-mail – office@dti.rs.

The Outcome

On the 7th of July this year, the British Government vocalized the importance of all the participants and all the solutions they have offered. Once all the answers and solutions were summed up, there were two conclusions:
• Exploring technological measures such as mandatory software or hardware for businesses which conforms to technical requirements that reduce the opportunity for ESS.
• An encrypted, unalterable, and complete transaction log containing details of every transaction and adjustment.

Overall, the Government is fully aware of the damaging effect ESS has when it comes to fair market as well. Meaning that those who use ESS are taking advantage and are working directly against those who comply with the law.

For now, the British Government is planning to use the experience participants shared and develop an effective and permanent policy against electronic sales suppression.

The post UK’s Plan to Fight Electronic Sales Suppression appeared first on Dti.

As a lot of tax authorities worldwide are slowly importing and adjusting fiscal e-invoicing and tax collecting systems somewhat successfully, there were some questions at hand that caused quite a confusion.

One such matter is tipping – to many taxpayers who own their own businesses (cafes and restaurants in this case) this part can be tricky and often cause misinterpretation. Luckily, some tax authorities made a decision to leave this freedom to the businesses.

Countries, such as Slovenia, deem that tips don’t need to be taxed, and as such, don’t require being part of fiscal receipts. Therefore, a waiter using the POS doesn’t have to register their tip at all.

In other countries, however, tipping seems to be a bit more complex, yet, the rules are simple and straight forward. In the example of the Czech Republic, we can see that handling tips has been described in three different scenarios.

Handling Tipping

Taxpayers in the Czech Republic handle tips depending on their business policies. Some facilities claim that tips are not business income, and as such, they should not be recorded on a receipt. Some other businesses, however, claim tips, and as a result, they must be recorded. Here are three examples of tipping according to the rules of the Czech Republic Tax Authority.

1. In case a business claims that tips belong to the employees and are not the business’ official income, the data on the receipt should look like this:

• Total amount of sales 182.00 
• Total tax base with the first reduced VAT rate 158.27 
• Total VAT with the first reduced rate 23.73 

Let’s assume that the customer ordered food and drinks for the total price of 182 CZK. Once the first reduced VAT rate of 15% is applied, the price is 158.27 CZK. However, in this scenario, the customer decided to pay 200 CZK to the waiter, which means that 18 CZK was a tip, and as such, is not shown on the receipt data.

2. In case that tips are a part of the business income, somewhat different rules will apply. The tip still doesn’t enter the VAT base as it is voluntary, not agreed upon, and has no impact on the final product (in this case, dinner and drinks). Although, the tip will be included on the receipt itself, meaning that all the 200 CZK will be shown.

• Total amount of sales 200.00 
• Total tax base with the first reduced VAT rate 158.27 
• Total VAT with the first reduced rate 23.73 

3. In case the tip is retained by the owner instead of the staff or the business, the same rules as in scenario 2 apply. The only difference is that the staff learns that the guest wishes to leave a tip only after printing the receipt. In these conditions, the same receipt as in example 1 has already been printed, so now the tip is registered separately with a different, single message:

• Total amount of sales 18.00 

Obviously, in none of the three scenarios is the tip taxed – the only requirement is for it to be recorded clearly on the receipt in case a business claims it.

In the case of Taxcore, all three of the scenarios are also very much adaptable. As a platform, TaxCore allows a lot of freedom (within the legal borders) to the taxpayers. In countries where TaxCore exists and is being used, tipping can work nearly the same; it can be recorded on the receipt without being taxable.

So, no matter the laws and the rules of the tax authority in question, TaxCore can adapt and fulfill all the potential needs.

The post Tips – Taxable or Not? appeared first on Dti.

Moreover, what most countries failed to recognize is the means this plastic waste reaches seas, oceans, and rivers. This directly caused the new problem to emerge – the microplastic water pollution. Microplastic is technically pieces of plastic smaller than 5mm, and they easily find a way into our drinking water due to this. Naturally, scientists and governments needed to put a stop to this.

Recycling, Banning and Putting a Levy on Plastic Bags in Fiji

Probably the most effective and earliest form of fighting plastic bag pollution is recycling, which most countries eagerly started to do and invested in. However, this proved to be insufficient considering the amount of plastic waste we were throwing away. So the next logical step was to impose a levy on every plastic bag sold or outright ban them.

And while some countries took rigorous measures, such as banning plastic bags completely, others weren’t quite prepared to do this just yet. Therefore, imposing a levy is a method many governments decided to run to.

Since the Island of Fiji was largely hit by a lot of waste which found its way to its shores, this small nation had to react urgently.

The Environment and Climate Adaptation Levy (ECAL)

As of August 1^st, 2017, all businesses are required to charge a levy of 10 cents per sold plastic bag in Fiji. With this, Fiji became one of the first countries in the world to declare war against plastic waste.

The officials stated that the money collected with the levy will be used to help ecological organizations and help the country fight pollution. Moreover, both locals and tourists will be reminded of the harmful effects plastic bags have each time they purchase one.

Considering that in 2017 Fiji Revenue and Customs Services (FRCS) and Data Tech International (DTI) introduced a whole new fiscalization method (TaxCore), implementing this levy into the system technically over-night was a possibility.

Since all of the POS units in Fiji are sending each receipt to TaxCore, online or offline, the Tax Administration has up-to-date information on the tax collected based on the plastic bags sold.

Thanks to the TaxCore platform, the government of Fiji was able to implement the new plastic bag levy on a tight schedule. Most importantly, there were absolutely no issues in the process and most of the businesses managed to comply immediately. This further proves the importance of digitalizing tax collection and fiscal economy alike.

To find out more about TaxCore and its many functions, feel free to get in touch with us.

The post The Plastic Bag Levy in Fiji appeared first on Dti.

Tax Fraud in the EU

Only in 2017, the member countries of the European Union lost approximately EUR 137.5 billion to tax fraud according to data on the EU’s official website. Unfortunately, this trend continued up to 2019 where not much has changed and the loss is still measured in billions. The issue hides behind the differences in tax collection between the members. For example:

• Luxembourg – 0.7% VAT gap
• Sweden – 1.5 VAT gap
• Cyprus – 0.6% VAT gap

Evidently, tax collection and paying for taxes in these countries does not present an issue. However, the situation in some other EU states is completely the opposite:

• Romania – 35.5% VAT gap
• Greece – 33.6% VAT gap

These results mostly indicate the performance of national tax administrations and whether they require modernization or not.

Using Zappers as a Means of Tax Evasion

Zappers are add-on programs that merchants with ECRs or POS systems often tend to use. The problem with them is that they don’t skim all sales, and they never skim credit card transactions. This allows for a lot of space in tax evasion that tax authorities have no way of detecting.

Disappointingly enough, zappers are mostly used in developed economies – for example, Sweden, Germany, and Spain, just to name a few. In Sweden alone, approximately 70% of the ECRs have Zappers installed. Therefore, Sweden is suffering great amounts of tax loss every year that could help boost the economy even further.

Out of the EUR 137 billion in tax loss in the EU, about EUR 20 billion is lost in the restaurant sector alone. The four countries that lose the most in tax revenue are Germany, France, Italy, and Spain.

Total Tax Revenue losses in the USA

On the other side of the pond, the situation isn’t much better. Compared to most of the Western governments, the USA falls very far behind. In 2018, tax revenue at all levels of the US government was 24% of the overall GDP.

The States are behind most EU countries, such as France, Denmark, Belgium, Czech Republic, Turkey, and Greece. They are also behind some Asian countries, such as Japan and South Korea. Making tax revenue losses in the USA, a big issue.

How Are Countries Fighting Against tax revenue losses?

Given that most developed countries are well aware of these problems, which methods are they exactly using to fight against them? Unfortunately, the methods being used are quite outdated and still rely on traditional audits. However, the governments are slowly realizing that the best way to fight technology is with technology.

TaxCore has helped developing countries such as Fiji and Samoa completely evade issues similar to these. Thanks to the complete digitalization of tax collection, any fraud or evasion is noticed immediately. Once a potential tax fraud is discovered in real-time, the tax authority can immediately send out an inspector to investigate the issue. This further motivates taxpayers to abide by the law and the loss of annual tax revenue remains at its minimum.

To find out how TaxCore can help governments battle tax fraud, feel free to contact us.

The post Tax Revenue Losses – in the USA and in the EU appeared first on Dti.

This procedure is crucial because it can be done without interrupting taxpayer’s operation at all – the personnel doesn’t have to turn off any tills or stop scanning new products for auditors to do their job. Also, if it happens that a POS card stops working for some reason, inspectors can use an application DTI developed to audit it on the spot. 

The idea of TaxCore is to help tax authorities long-term, in this case, to the Vat Monitoring System (VMS) in Fiji, which means that the tax authorities have the freedom to take full advantage of the platform and come up with their own effective ideas.

The post Fiji Vat Monitoring System – Onboarding and Training appeared first on Dti.

Therefore, in 2017, DTI was invited to help FRCS come up with a new system that ensures easier and accurate tax collection. By offering the best solution with our platform, TaxCore, the government of Fiji made a decision to contract DTI to help them in the upcoming transition to a new system called VAT Monitoring System (VMS).

What makes TaxCore incredibly useful is the fact it offers a complete insight into every single receipt that goes through the system, may it be from a supermarket, wholesaler, doctor or a lawyer’s office. Therefore, in the present, the tax officers in Fiji can easily detect any irregularities with VAT, STT, EL or other levies throughout the country.

With VMS, Fiji probably has one of the most modern systems in the world which is fully digitalised e-invoicing system. However, given the challenging telecom infrastructure which often causes connection disturbances, DTI was faced with main obstacle: how to make e-invoice immediately verifiable regardless if Internet on premise is up or down.

We had to devise a system that would allow collecting data from a POS (Point of Sale) device even when the connection breaks. This data remains secured thanks to a smart card connected to the POS until the connection restores, and then it is forwarded to the tax office.

DTI’s team of programmers was ready to put a lot of time and effort into finding proper inventions to work around all the possible obstacles. It is thanks to their hard work we managed to successfully implement TaxCore and help the government of Fiji battle tax fraud efficiently.

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