The process of digitalizing fiscal data and tax collection systems (fiscalization) is one activity many countries around the world have been actively working on in the past few years. Most people claim that modernising both of these crucial factors of a country’s economy is nothing less than revolutionary.
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 1st 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.
