Cashless payments in Kyrgyzstan

 

17 June 2015 

Promoting electronic transactions and IT fiscal solutions to reduce the informal economy in developing countries.

Developing countries are becoming increasingly aware of the potential of taxation when it comes to strengthening their economy and substantiating their national budget. The widening of the tax base and efficient tax administration are now high on these countries’ agenda for development. And not a minute too soon: estimations have shown that the revenue losses experienced by the governments of these countries due to tax fraud and the informal economy are staggering.

In Kyrgyzstan, for instance, the “shadow economy” deprived the country of US$6 billion since its independence in August 1991. It reached its maximum size between 1998 and 2011, at a shocking 58% of the GDP. Although it has decreased since then, to reach 48% in 2014, it still cost the national budget the equivalent of US$974 million that same year.

This prompted the government of Kyrgyzstan to adopt a program, during the first quarter of 2015, aiming to improve tax procedures for small and medium businesses. Consequently, several laws have been adopted to encourage not only businesses, but also individual consumers, to implement and use non-cash payment methods when selling or purchasing goods and services. Although the banking sector is developing at a steady pace, and the number of bank cards in circulation reached 908,908 at the end of 2014, only one consumer out of three currently makes non-cash payments in Kyrgyzstan (Source: http://www.timesca.com/news/15061-cashless-payments-to-reduce-shadow-economy-in-kyrgyzstan).

In order to be able to offer a cashless payment option, businesses will need to acquire electronic sales recording devices. The authorities will then have to monitor the use of these devices, if they are to gather the data they require to enforce tax compliance. Realizing the informal economy reduction plan initiated by the Kyrgyz government will require not only a unified state policy, but also relevant technologies. In order to facilitate the acquisition of such technologies, the Parliament has approved a number of changes to the tax regulations in place, to allow imported banking equipment for cashless payment to be exempt from VAT (Source: http://www.timesca.com/news/15061-cashless-payments-to-reduce-shadow-economy-in-kyrgyzstan).

Since this program relies heavily on tax incentives for the compliant businesses and on the consumers’ involvement, it is crucial to select the right technological solution. Ideally, this solution should help the tax authorities to create the right conditions to make tax compliance not only verifiable and controllable, but also more incentivising.

In this respect, the Avatar electronic fiscal solution is currently the most advanced and the most comprehensive on the market. It would allow the Kyrgyz government to include the consumers in its efforts to promote tax compliance. The involvement of the consumers in the compliance process is essential, as the number of receipts issued by the traders is greatly influenced by the number of these same receipts claimed by the customers. Thanks to its integrated fiscal lottery feature, Avatar’s EFD (Electronic Fiscal Device) solution would allow the authorities to considerably increase the number of claimed receipts and to involve the consumers in the tax compliance loop.

The key issue as far as the informal economy is concerned, whether in Kyrgyzstan or elsewhere, is the fiscal inclusion of the citizens. It must be encouraged and facilitated, not only through well thought-out laws and programs, but also through the implementation of adequate technological means.

 

Read the whole article: http://www.eng.24.kg/bigtiraj/175105-news24.html

Latest from Twitter

Please join our Mailing List and win a free copy!

Keep updated with the latest in Fiscal Technology innovation from Avatar.

AT A GLANCE

Avatar Technologies Ltd is a division of Global Voice Group (GVG) specializing in electronic fiscal solutions for governments and taxpayers. Our world-class technologies and solutions have been designed specifically to meet the needs and requirements of tax authorities in emerging and developing countries.

Contact Us

© 2018 Copyrights Avatar Technologies | All rights Reserved | Terms And Conditions