VAT: Between the difficulty of collection and ways of improvement

VAT VAT is one of the most important types of indirect taxes that are imposed on goods and services in all their productive stages and distribution, and the final consumer burden bears, and countries estimate their value as a percentage of the final price of the commodity or service, so that its value is estimated according to the added value of each stage ofThe stages of production, and the consumer bears it, then obtained by the financier, who plays it to the state.

It is estimated that the victims will reach the added value of the financial budget 2020/2021 about 401 billion pounds, compared to 364.6 billion pounds, an increase of 36.463 billion pounds, or 10%.

Income taxes and the added value of the added value are among the most important sources of public taxes, and despite this, the collection of the added value tax is facing many difficulties, and this is not new to the Egyptian reality in collecting taxes..

First: Difficulties for collecting value -added tax

Despite the presence of receipts or bills that prove commercial transactions, many tax authorities are still unable to check effectively in what is reported by companies, due to the lack of the ability to enforce, which results in tax evasion.

The ability to collect the added value is also diminished as a result of tax fraud, especially with the possibility of receiving receipts easily.Companies may seek to sell receipts to other companies or collude with their commercial partners in order to submit a report that contains values less than the value of commercial transactions.

The value -added tax system is based mainly on the incentives provided to buyers in order to claim sellers for bills, as the final consumer does not have the incentives that pay him to request these bills..This contributes to reducing the ability to account and monitor companies as a result of the absence of these bills, which leads to the extension of tax evasion across all supply chains.

Value tax declarations are characterized by a high cost, especially as they include many measures for the purpose of paying the tax, which generates a burden on small companies, so some dollar allows smaller companies to get out of the value -added tax system, and this would lead to avoiding the pushing of companies to the informal economy.Many countries are applied to impose a value -added tax based on the value of the business undertaken and impose more challenges.

Second: Ways to improve the collection of value -added tax

The ways to improve the collection of the added value of the added value in improving sales control through improving the technology used in the issuance of bills, through- for example- unified bills that contain time stamps and serial numbers.

Many countries are committed to merchants using electronic bills, which contributes to reducing the manipulation of revenue numbers and providing large quantities of data on final sales.

In order to mention, the technological tools of the tax authorities provided enforcement ways to improve the performance of value -added tax systems, such as Brazil;Where electronic bills are sent in real time.In Uganda, taxpayers from merchants must be reported electronically of value -added tax revenues and to inform the transactions between companies.In China, the digitization of the value -added tax system allowed increased tax payments by large manufacturing companies, and these technologies help generate information about prices, quantities and information information, which leads to the decision to take the decision beyond mere tax policies.

On the level of motivation programs for financiers and citizens to collect efficiently for value -added tax, multiple styles and methods used in such programs, and the most common style is that assistant to allocate bonuses to customers by giving them points as a counterpart to purchases, through which many data can be obtained about behaviorConsumers, their preferences, geographical distribution and other data.

Loyalty programs are very common in the retail industry and work as a very useful tool for companies.It also provides these programs to motivate loyal customers to make additional purchases through their rewards, and they also aim to attract new customers..

Recently, technology loyalty systems have used to expand its scope.Instead of asking customers to carry cards or traditional vouchers to reach the advantages, an increasing number of loyalty programs has been provided for anyone who has a mobile device.This can be applied through some programs such as the exclusive program that is usually managed internally, as the concerned entity works as the only authority in the loyalty program.The loyalty program operator is responsible for keeping a record of the acquired loyalty points and later recovered by each member.The multi -party is more complicated as a result of the presence of multiple entities shared in the program.The customer becomes a member of the loyalty program by entering an organic agreement with the loyalty program that provides different advantages for each seller in the service providers group and the extent of the barter transaction..

Third: International Experiences

On the level of models used in some countries to reform the value -added tax system, South Africa has applied loyalty programs, and it is supposed to achieve better results with the increasing dependence on mobile phone technology, in a way that facilitates the application of the provisions of the value -added tax law and overcoming its difficulties, and facilitating their interpretation in a way that is consistent with the vision of stakeholdersThrough the application of loyalty programs.

The goods or services are subject to a 14%added value of the added tax, and when the legislative requirements are fulfilled, the loyalty operators can adhere to the value -added tax when customers get an advantage when they are deployed to buy their goods or services, and companies have established partnerships with other industries companies to lure customers with added value offers (such as deduction50% on a meal in a dining outlet when the customer buys clothes with more than a specified amount in the parking outlet).These programs are not only enhanced by the brand, but also enhances transit in a very competitive market.

On the other hand, Ssingapore launched the name "commodity and services tax" at the value -added tax, and it is imprisoned by about 7%, and the financiers registration in the system in order to pay it to the state, and the financier can withdraw from it in the event that he stops his economic activity or in the event that he does not achieve a return that exceeds(1) million Singapore.It is not allowed for commercial activities that are not registered in the tax and services tax to impose commodity and services tax.Where the inclusion of goods and services is a crime if it is not one of the companies registered in the commodity tax and services, and exports are not subject to it.

As for the European Union, its country was losing billions of euros in VAT (VAT) every year because of fraud and evasion and avoiding it, in addition to its inappropriate collection systems..As a result, the European Union countries provide many measures to increase the compliance of VAT and make their systems more resistant to fraud..

One of these measures is the mechanism of the propulsion.The divided payment mechanism changes how to collect the value -added tax in general, by making the payment of the tax base (i.e. the net product price for the added value of the added value) separately from the value of the value -added tax..There are differences in the divided payment mechanism, but in general, the customer pays an invoice to two separate accounts: the amount is paid to the commercial bank account of the supplier, and the value of the value -added tax is paid directly to a bank account dedicated to the supplier, called the value -added tax account.

In practice, one payment will be raised and will be divided by the bank.The divided payments are a procedure to combat fraud in value -added tax and not compliance by removing an opportunity for suppliers to assume value -added tax and disappear without announcing them or pushing them to the Tax Authority (missing trading fraud).

It is away from the main current to collect the value -added tax in the European Union, which depends on the seller for collecting the tax, and on periodic transfers of tax by registered merchants.

In order to mention, the segmented batches were carried out as of July 1, 2018.Unlike Italy, Poland's plan from customers did not ask for two separate batches instead, Poland is one of the one who is implemented for the bank, which will then divide the payment into a separate bank account: one account of the net amount of service is paid to the commercial bank account of the supplier, and the other account of the tax amountThe added value is paid directly to a bank -added bank account for the supplier.The scope of the Folulinda -divided payment is much broader than the scope of Italy, as it is applied to all commercial activities registered in the value -added tax.

In conclusion, digital transformation and financial inclusion have a major role in the tax reform process in general and value -added tax in particular;Where some studies indicate that the shift to electronic payment and collection on both sides of the budget achieves savings estimated at about 320 billion dollars annually in developing countries.

Also, the public financial digitization enables governments to increase the tax proceeds and combat tax evasion, and helps to raise the efficiency and transparency of public purchasing systems.Financial inclusion is the basis for the success of the public financial digitization initiatives based on the shift towards electronic payment and collection systems.The government's tendency to digitize public financial.

Statistics indicate the humility of the inclusion of individuals and companies in the Arab region to financial and banking services compared to the global average and other regions.Therefore, the need appears to be armed to adopt a supportive strategies for financial inclusion, by focusing on youth, females and population in remote areas, by applying a set of policies on both sides of supply and demand for financial and banking services.

Opinion articles and blogs do not necessarily express the viewpoint of the editorial board.