1. A presentation on The Effective Implementation of Electronic Fiscal Devices (EFDs) and their Impact on VAT Administration – Kigali, Rwanda . 16th -19th may 2018

2. Revenue Administration Objectives
Tax and revenue agencies are under constant pressure to find ways to maximize revenue and efficiency and improve constituent services.
Maximize Tax Revenue
Improve Taxpayer Services
Taxpayer Education
Reduce Administrative Costs
Tax Administration
System 1
Revenue Authorities are seeking to maximize revenue collection by expanding the taxpayer base and even lowering tax rates. 2
Online taxation services, EFT, and other electronic methods satisfy taxpayers and improve taxpayer’s tax return willingness. 3
Deploying an extendable and easy adaptable system to achieve best benefits of investment and fulfil future requirement of RAs. 4
Knowledge transfer during implementing enables reforming of office culture and empowers RAs’ technological capability.

3. Strategic Thoughts
With the rapid growth of the manufacturing business, there has been a boom in wholesale business in developing countries in view of world economic development. Consequently, Value Added Tax (VAT) is playing an increasingly pivotal role in the sourcing of government revenue. Unfortunately, there is no deliberate system that works properly to assist governments in increasing revenue collection from this standpoint.
Furthermore, with the surge in development of ICT infrastructure worldwide, e-commerce industries are developing exponentially. This brings another challenge to revenue authorities to establish a mechanism to collect the tax from businesses in paperless environment such eBay, Amazon,Jumia,Kilimall,JD.com, Alibaba etc..
In view of the above, there should be a deliberate step to implement a transactional based revenue collection system to improve turnover tax collection. An electronic invoicing system will assist revenue authorities to widely adopt the transactional based revenue collection approach.
October 13, 2018

4. Challenges to Revenue Collection
As world economic recovery is still in slow and unstable pace, many developing countries' governments are seeking new approaches to improve their revenue collection administration through investment in e-filing based integrated tax administration systems. However, revenue authorities are still confronting the following challenges regardless of implementation of these Integrated Tax Administration Systems.
Cash based transaction used in most of business activities. The current banking system cannot provide accurate and timely information to reflect the real income of taxpayer, a large informal sector and unregistered taxpayers
The tax returns filed are not easy to verify since their incomes cannot be precisely estimated or cross- verified;
There are loopholes which enable taxpayers to evade tax and become tax delinquent especially in VAT. All these tendencies are difficult to detect and prevent;
Low willingness of tax return submission from taxpayers due to the existing inconvenient tax system, poor record keeping ,
Limited audit resources available to handle massive tax fraud cases and verification of fictitious input tax invoices
Deliberate and fraudulent suppression or under-declaration of sales, non-issuance of invoices, false refunds and offset claims and untraceable taxpayers.

5. WHAT IS AN EFD?
Electronic Fiscal Device (EFD) means a machine designed for use in business for efficient management controls in areas of sales analysis and stock control system and which conforms to the requirements specified by the laws.
TYPES OF EFDs
Electronic Tax Register (ETR)
The device is used by retail business that issue receipts manually.
Electronic Fiscal Printer (EFP)
The device is used by computerized retail outlets. It is connected to a computer network and stores every sale transactions or details made in its fiscal memory.
Electronic Signature Device (ESD)
The device is designed to authenticate by signing any personal computer (PC) produced financial document such as tax invoice. The device uses a special computer program to generate a unique number (Signature) which is appended to and printed to every invoice issued by the user’s system.

6. What is an e-Invoice System
e-Invoice is an application system with electronic invoicing capability which can enable a business entity to issue, receive and declare the invoice or receipt in paperless manner under the Revenue Authority’s authentication facility. The e-invoicing process will be integrated with the revenue administration system(eTax) in terms of taxpayer registration, invoice application and authentication, return and assessment and even automated audit program.
e-Invoice solution consists of following modules to realize a scalable and expandable invoicing solution in paperless manner:
Registration
Register as an authorized e-Invoice system User with its taxpayer registration
Invoice Issuing
The registered taxpayer can issue electronic invoice to the client
Invoice Authentication
The issued invoice from taxpayer shall be authenticated prior to delivery to the client in , SMS or any other prescribed facility facilities.
Invoice Declaration
The issued and authenticated invoice can be declared and verified through the system for the Tax Return/Refund process.
Invoice Management
It is a management module to supervise and monitor the taxpayer e-Invoice issue/declaration to prevent invoice forgery and falsifying.

7. Model Frame work EFD/e-Invoicing System

8. e-Invoice Solution from paper to 100% paperless – How it will be ImplementedRA
Grasp the actual operation of enterprises
Save the cost of invoice management
Improve service level of revenue authorities
Contribute to the national macroeconomic regulation and control
Automated return generation
Data analysis & risk detection
Send/ Invoice
Register Invoice & Return Submission
Auditing Support
Government-specified guidelines
Verification & Return Submission
Accounts Receivable (AR) system / Web-based form
PDF/OFD Invoices
Enterprise
Reduce the cost of invoice issuing and
management
Reduce tax risk
Improve the level of financial and internal
management and operational efficiency
Easily obtain and verification invoices
Buyer
/Supplier
Web Portal / API
Revenue Authority
E-Invoice Solution
Consumer
More convenient to obtain invoice,
prevent losing invoices,
Easy way of invoice verification
More secure to protect after-sales rights
e-Invoice Solution is a cloud-based application system with electronic invoicing capability which enables business entities to issue, receive and declare invoices or receipts in a paperless manner under Revenue Authority’s authentication facility.

9. Benefits From EFD/e-Invoice
Unified Invoice Issuance and Control with paperless capability
Improved User Experience
Unified invoice will be the breakthrough point to establish transactional based revenue collection mechanism. “No Invoice, No Business!”. And e- Invoice will expand the revenue collection base from new economic development.
It will improve taxpayer’s willingness of their VAT Return Filing. Most importantly, e-Invoice will be the key to revenue authority to monitor and control the business flow and monetary flow either.
Paperless & Secured Transaction Data Collection
Auto-Declaration, Accuracy and Timely
It will prevent the revenue collection loss due to invoice forgery and false invoicing activities
The issued invoice and received invoice information will be collected automatically, which enables the generation of declarations without human interaction.
Customizability for Different Business Scale
Flexibility for Possible Changes of Tax Law
Multiple solutions are available for large, medium and small business.
The system is flexible for any possible changes of tax law in terms promoting economic growth, such as tax types, tax rate and etc. This will also accommodate the annual policy changes.
Ultimately, EFD/e-Invoicing solution will assist revenue authorities by greatly improving revenue collection through transactional revenue collection and enlargement of taxable revenue base.

10. IMPLICATIONS Issue Response
Will the solution affect all business people?
This will be a phased process. However, by law all gazette taxpayers carrying out businesses are mandated to use the solution
Shall the business stop when connectivity is lost?
The EFDs shall have an offline fiscalized memory to save data when Internet connectivity/power is lost
Who will meet the cost of EFDs?
The cost of the EFDs shall be an allowable deduction to the taxpayer and therefore taxpayer will meet the cost.
Who will do the maintenance of EFDs?
The EFD vendor will do sales, services and spares
The system should support various languages
The e-Invoicing solution shall support various languages
How will the data relayed to URA be secured?
The system shall use PKIs and security certificates to encrypt data during transmission.

11. Success Cases on implementation of EFD/e-Invoicing
China - Golden Tax Project
Present
A nationwide tax affairs information system that involves the construction of 1 national industry network, 2 nation-level tax affairs handling centres, 71 province(autonomous region, municipality directly under the central government, city specifically designated in the state plan)-level tax affairs handling centres, over 600 thousand internal workstations, 10 billion annual affairs handling volume, 700TB total data volume, over 800 thousand internal users, and over 100 million people(households) of external users.
Namibia - Integrated Tax Administration System
Present
A system that is built under contract to work as national comprehensive tax affairs management system with the function of online tax reporting, and call centre, which covers 7 regional tax affairs offices, has over 1000 internal users and deals with nearly 100 million affairs yearly.
Sudan - Tax Core Management System, Rwanda – EBM
Present
A system that is built under contract to work as national comprehensive tax affairs management system with that function of online tax reporting, which has 14 core management modules including taxpayer registration, tax filing, fee collection management, financial management, etc., covers 14 regional tax affairs offices, has over 5000 internal users and deals with 200 million affairs yearly.

12. END
October 13, 2018