GPRS cash registers may discriminate business
16 June, 2011
GPRS cash registers may discriminate business

Installation of the much trumpeted GPRS cash-register system is supposed to start by end of this June and be completed till summer-end. The novelty is a part of new Economic Course adopted by Georgian government past year and aimed to ease life to business. However this here initiative seems to ease life to revenues service in fact that will enjoy comprehensive control of taxes in trade business, while the business itself faces extra cost and risks.

Georgian trade people have to

replace their old cash-registers by state-of-the-art on-line based GPRS cash-register systems by summer-end this year. However the promised free of charge replacement of old “machinery” will be free only to small business, government says. Economic analysts find the decision unfair as far as introduction of the GPRS system falls in governmental not in business competence as it is aimed to ease tax administration to the revenue service.

As Kakha Baindurashvili, Minister of Finances of Georgia, explained [when airing the GPRS initiative past December] by adopting the GPRS system cash-registers the country would adopt the European tax administration system. Unlike the currently operational cash-machines [that only print bills on sold products based on which tax officers calculate taxes] the GPRS-based cash-machines will be connected with the revenue service’s centralized base through on-line system and any financial operation made on the GPRS-based cash-registers will be automatically reported there. Accordingly, the revenue service will have full and comprehensive information on daily sales and financial activity of each trade-related business that prevents tax evasions.

Economic analysts acknowledge that the GPRS-based better tax control is handy to business ultimately as it will make simpler and easier relationship with tax officers but this mechanism may justify expectations if is properly managed and does not pose risks to business.

“The GPRS-based cash-registering is a good idea as far as it improves tax control mechanism and this tool works well in many countries. But the question here is whether or not the state undertakes the new cash-registers-related extra outlays and insures smooth removal of technical mistakes,” Levan Kalandadze, an economic analyst said.

However, neither cash-registers nor their administration details are provided to public as of yet. According to Jaba Ebanoidze, Head of the Revenue Service of Georgian finance ministry, all details will be cleared after cash-machines will be delivered.

The Bulgarian-based Daisy Technology [that won the tender for procurement of 100 thousand cash-registers announced by the revenue service] did not provide with the promised equipment as of yet and installation of new cash-machines scheduled to start in this past March was postponed to June.

Uncertainty makes business nervous.  First of all the question is who will be paying for procurement of new cash-register equipment? Economic analysts think the procurement expenses must be undertaken by the state as far as better control of tax administration is in government’s interest.

Initially government promised to assume the GPRS procurement expenses completely. However, now it changed terms and assumes to cover procurement expenses only to small business.

“The general principle is to make cash-registers free to small business. It will be sold to big business,” Ebanoidze told Georgian Journal.

Bulgarian company requires USD 13. 3 million for procurement of the entire consignment of 100 thousand cash-machines that means that one cash-register costs USD 133 and big business has to cover this extra cost itself. The cost cannot ruin big business, Kalandadze said, but the principle that the state overlays its due expenses to business is discriminating.

“The size of business does not matter in this case; the principle within itself is discriminating. The state must acknowledge that better tax control falls in its, not in business, interests and pay off all due costs itself,” he said.

Another question is further costs related with operation of new GPRS system that is based on on-line service. Cash-registers are obligatory to any trade outlets including petty ones that need no internet service at the moment and who will insure monthly payments for internet provision to them is an open question as yet.

Irakli Lekvinadze, an economic analyst, also worries that in case of technical mistake business may bear responsibilities and be at loss. The point is that according to the current law, when tax service is already informed of technical mistakes an entrepreneur has to submit an application to the revenue service if he/she wants to retrieve the mistake and this service is payable. For example, what may happen if a salesman mechanically registers GEL 1000 instead of GEL 10 or GEL 100 as a price for sold product? Today they can immediately cancel the operation, but through the GPRS system the information will be immediately delivered to the tax service database and how to cancel the blunder operation? To pay each time?

These details are not outlined as of yet.

“We have not received cash-registers as yet and we have not refined details therefore,” Ebanoidze said.

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