As the end of March deadline for all Value Added Tax registered taxpayers in Rwanda to acquire Electronic Billing Machines nears, efforts continue to be made from the stakeholders to ensure that businesses manage to integrate the system in their operation with minimal obstruction.
First introduced in late 2013, electronic billing machines have since then been included in the law governing VAT in Rwanda obligating every trader to own the machines. First set at end of year 2013, the deadline for all VAT registered businesses to acquire EBMs was later shifted to its current limit in a bid to allow taxpayers more time to comprehend to the regulation. The blame for the delay fell strongly on the business community where many were accused of dodging Rwanda Revenue staff who were on the move sensitizing for the uptake of the machines and installing for those who would agree. However, businesspeople too shunned the blame throwing it squarely on suppliers with many arguing that the machines on sale were of poor quality while others complained of the high prices for the machines.
Against the backdrop, successful roll out of EBMs which is to be determined in the remaining few days of the March is very dependent on taxpayers appreciation of their (EBMs) importance in addition to the machines’ suppliers importing best technology for the Rwandan market.
To determine the likelihood of achieving the end March 2014 deadline, Hope Magazine reached out to traders and suppliers in order to establish their positions now that days to the final March 31st day when each VAT registered business is required to own and use an EBM are numbered.
Businesses appreciate EBMs but retain skepticism on whether deadline will be met
Much as businesses have been slow to comprehend the EBM law, proprietors to whom Hope Magazine talked expressed interest in the machines. The traders believe in their potential to ease business management especially with regards to tax payment.
Karemera Moses operates a mini supermarket in Kimironko, a suburb in Kigali City. He noted that, “with the EBMs, I am convinced operations are going to become easier and trustworthy. In the past, we used to hire a local accountant to come help us in balancing books so that we could declare to Rwanda Revenue Authority but now that cost will be inexistent.”
Karemera added that RRA’s auditing activity was often a challenge to his business whenever that occurred. “Occasionally RRA would come to verify whether the declared taxes are the real ones, a process that not only wasted valuable time but also affected our business’ reputation in the neighborhood. When locals see RRA officials, the first thing that clicks in their minds is you are an evader and this hurts business.”
Kumar Karanam the Director of Finance and Operations at Akagera Business Group, a company ranked among the 10 biggest tax payers in the country similarly appreciates the benefits presented by the Electronic Billing Machine System.
“These systems will help ease the process of paying VAT considering that they facilitate communication with RRA on what amounts are to be paid. At the end of every month, all one will have to do is cross check their website and then verify whether the value indicated coincides with the one recorded on the machine.” However for a company the size of ABG, Kumar said that integrating the system with already existing ones is still a challenge that might take longer than the set deadline to resolve.
“We already have a system monitoring every transaction including sales. Thus integrating the Electronic Billing a system requires overhauling it and integrating the two which is going to be harder compared to another smaller company which will only need to start using the EBM.”
Kumar added that their company is already making efforts to achieve the needful, “as always we want to contribute to the wellbeing of the Rwandan economy” but also requesting RRA to exercise leniency to those companies that might fail to meet the set deadline.
From suppliers; AA Uni Rwanda Ltd
Besides the roles of RRA and the business community in ensuring successful adoption of the EBM systems, another key stakeholder in the process is the suppliers. These are counted on to offer best quality technology of the EBMs available globally and facilitating traders wherever possible.
In efforts to establish the readiness of the selected suppliers, Hope Magazine met with Agha Ahmed Hussain Shirazi the Director of Fiscal and Business Solutions at AA Uni Rwanda Ltd. The company is an IT solutions business which was selected among the few genuine suppliers for the electronic billing machines technology.
billing machines technology.
What is an EBM?
An Electronic Billing Machine comprises of two components, a Certified Invoicing System (CIS) which communicates with RRA systems, and a Sales Data Controller (SDC) which facilitates monitoring sales activity in a business.
The Sales Data Controller (SDC) records each transaction received from the Certified Invoicing System (CIS), and in so doing ensuring that electronic signature on the receipt is printed. The signature is verifiable by RRA officers using a special decryption tool which is unique for every installed SDC device.
Are there any differences in EBMs? Some traders have said they already have business control systems thus do not see need in buying new hardware
The Electronic Billing Machine is not just about the hardware but rather is a system that comprises of the two components as earlier mentioned.
There are various structures of the EBM that a business may purchase basing on its needs. However on our side as AA Uni Rwanda, we can only either sell machines with the entire component or else the software that can be installed in already existing systems. For instance companies which originally have management systems, there is no need to purchase whole new system software. We have the capacity needed to integrate RRA’s requirements without necessarily having to reinstall.
Being that you are a VAT registered business, how do find using these machines in practice like?
Only that when I say this, someone may think it is only because we sell the products. But we do not only sell EBMs but also a wide range of other Information Technology hardware and software.
We have been using the EBM now for the last four months and I can surely say that the benefits are quite huge only that one can see that after investing in and using it. For instance, with the EBM controlling stock is much easier since every sale is recorded
There have been various occasions when similar innovations come into play only to realize later that the suppliers of the technology are not ready to satisfy the ensuing demand. What is your position on that?
RRA gave us ample time to prepare for the job and I believe we are very prepared to serve the entire business community if that was the case. We have enough stock and besides just selling the machines, we equally support our customers to acquaint with using them. There are daily trainings in which our customers get trained on efficient use of the machine until when a buyer feels comfortable with the gadget.
How many machines have you sold so far? Do you think the March 31st deadline is realistic?
In early days of introduction of the EBMs, traders were slow at buying them but today we have seen the numbers surge forward. We have sold about 1000 and I hope that the deadline will be respected. RRA has also been very supportive and acting fast on all the machines sent to their premises for activation something that is very vital if the deadline is to be met.
Which process does a taxpayer go through to have the EBM installed at their premises?
Upon purchasing the system, we take the particular machine to RRA for activation which is done against an individual’s Tax Identification Number.After the process, we pick the activated machine from RRA to the customer’s premises. Then the system is ready for use.
Various traders have in the past complained about the poor quality of the electronic bills issued by the machines. What causes that and how could it be solved?
First I want to assure all taxpayers that we have the best global technology of EBM systems selling here at AA and that we give our customers a one year and three years guarantee on SDC and CIS respectively during which period we freely correct any faults that may arise. For the quality of print on the electronic bills, it is an issue of the quality of paper. Traders should be careful on where they purchase their paper from.
Penalties provide by law to taxpayers who will not have met set deadline
According to the law obliging taxpayers registered for VAT to use EBMs, failure generates penalties which are as follows. “RRA will immediately withdraw administrative privileges formally granted to compliant taxpayers for those who will not have complied with the set deadline,” Drocella Mukashyaka, intimated. Accordingly, noncompliant taxpayers at the elapse of the deadline will lose the privileges that the tax body gives, including Quitus Fiscal, Blue Channel, Gold Card scheme and installment payments for taxes; all of which are necessary for efficient business operations.
For those taxpayers participating in public tenders, tax clearance certificates and statement of arrears that are important in the tendering processes will equally be stripped. Cash fine for large tax-payers is set at Rwf20m, while medium tax-payer shall pay Rwf10m. Small and micro taxpayers will be fined Rwf5m and Rwf1m fine, respectively.
EBMs are important to businesses and government
Only if someone has an ill intention of evading taxes and retarding national development, otherwise EBMs present as first opportunity the ability to ease the process of collecting taxes and monitoring tax payers to ensure that they contribute to national wellbeing as bound by law.
In respect to the ease of collecting taxes, the electronic billing machines are expected to reduce the cost of auditing taxpayers and collecting taxes on RRA. The reduction will reflect positively on Rwanda’s budget.
“Money originally spent in collecting taxes (which is huge) can then be used in implementing other developmental projects,” Drocella Mukashyaka the Deputy Commissioner in Charge of Taxpayer Services recently said during a news conference.
Besides benefits to RRA and hence the general public through reducing the strain of tax collection on national coffers, EBMs present added value to individual businesses mainly with respect to streamlining sales and other related management needs.
In addition, other beneficiaries of the machine are consumers. By issuing the electronic receipts, traders will be automatically communicating to RRA systems the amount in VAT paid on every purchase.
This will ensure that buyers know how much they are paying for the commodity and taxes respectively.
To facilitate this process of issuing electronic receipts every time a sale is made, RRA has initiated consumer competitions where the contestant with the highest number of receipts is rewarded.