Countries worldwide crack down on tax evasion
8 July 2015
The Avatar fiscal lottery takes the gamble out of VAT collection and compliance.
There is currently a global interest in the potential of fiscal lotteries to curb tax evasion and to increase governments’ tax revenue. Fiscal lotteries aim to curb informal business-to-consumer transactions by encouraging consumers to claim their sales receipt. The incentive is that this receipt doubles up as a lottery ticket, giving its holder a chance to win a prize.
Various countries in different regions of the world have implemented a fiscal lottery program to optimize VAT compliance and collection. Malta, for instance, was the first European State to introduce such a program, as early as 1997. Recent figures published by the National Statistics Office show that thanks to the fiscal lottery, the Maltese government’s total VAT revenue increased by 12.7% from January to May 2014 compared to the same period in 2013.
Following a few unsuccessful attempts at enforcing VAT compliance, Greece decided to tackle its massive VAT evasion problem through a fiscal lottery. By that time, the VAT evasion rate had reached a whopping 30%. The Greek government estimated that the introduction of the fiscal lottery, combined with stricter invoice control, would enable it to collect an additional 500 million euros (or US$615 million) on a yearly basis.
Thailand is the latest country to envisage the implementation of a fiscal lottery. The Ministry of Finance is indeed planning to reintroduce prize draws to raise the State’s tax revenue, rather than increasing the VAT rate. This new measure is expected to increase the country’s tax revenue by 10%.
Clearly, the incentivization of the consumers is a key aspect of the tax compliance enforcement strategy. In this respect, the Avatar electronic fiscal solution is currently the most advanced and the most comprehensive on the market. The developers of the Avatar Electronic Fiscal Declaration (EFD) solution have understood that it is crucial to involve the consumers, as the latter have the power to force compliance on the traders simply by claiming their purchase receipt.
That is why these developers have integrated a Fiscal Lottery Program in the Avatar EFD solution. Any receipt printed using an Avatar G4 or G5 sales-recording device displays a lottery ticket number that allows the holder to enter a lucky draw. Avatar’s EFD solution thus allows the authorities to considerably increase the number of claimed receipts, which has a positive impact on the number of receipts issued by traders.
One of the many benefits of the Avatar solution is that it brings the customers into the compliance circle through its integrated fiscal lottery mechanism, thus forcing compliance upon the merchants. Unlike other solutions, it uses a proven crowdsourcing scheme to deter VAT suppression and tax avoidance in the retail sector.