BURS plans e-billing to cut VAT fraud
Mbongeni Mguni | Monday October 31, 2022 06:00
Already in use in some countries in Africa, the VAT e-billing system involves digitising the tax invoicing system to allow live updates of transactions to the tax agency.
At present, the BURS estimates that it is losing between 30 and 50 percent of the VAT it could be collecting annually, figures which for the 2021-22 financial year equates to as much as P5.5 billion.
BURS officials recently told journalists that a benchmarking exercise had been completed and the procurement process to engage a project manager for the e-billing solution was underway. The benchmarking took place in Rwanda and Tanzania among others.
“The team went to Rwanda, which was an amazing experience where at one restaurant, as you buy, the system reports to Rwanda’s tax agency to say this is how much VAT is owed,” BURS customs services commissioner, Segolo Lekau told Mmegi. “As BURS, we would be able to see how much we are expecting by the time you come to do your returns,” he said.
The plans for e-billing comes as a high profile case continues in the courts involving the alleged loss of millions of pula from the tax agency due to unauthorised VAT refunds to companies. It is alleged that suspects in the case took advantage of the lack of VAT refund audits at BURS and connived to secure refunds amounting to millions of Pula.
The case has left an egg on the faces of BURS superiors.
“The VAT fraud investigations are ongoing with law enforcement agencies and we have had to review our processes, especially those that allow these activities to happen,” Lekau said. “We do not see any recurring cases.,” he said.
Meanwhile BURS commissioner of operations, Tutu Bakwena explained that the rollout of the e-billing system would likely not be done across the board countrywide, taking into account the varying capabilities of the different commercial entities.
“The project manager will advise us whether we have a total rollout across all sectors for those registered for VAT or not. But it is difficult to say at the moment and it may be a phased roll out depending on connectivity, access to machines and other factors,” said Bakwena.
Between the beginning of April and the end of September, the BURS collected P4.78 billion in VAT, a figure Bakwena said was lower than expected.
“It’s almost a 20 percent shortfall but this does not mean the e-billing will make it shoot up,” he told Mmegi. “The solution is supposed to provide us with data to help us determine the correctness of the submissions from taxpayers. There may be an improvement with e-billing but I cannot say how much it will be', he said.
A tax gap analysis by the BURS last year indicated that up to 60% of those who were supposed to be paying various types of taxes, was not. While the tax agency has been reluctant to point out sectors which could be dodging their tax obligations, experts who previously spoke to Mmegi said plenty of loopholes existed for tax evasion and avoidance.
The areas include large businesses that actively engage in tax avoidance where their liabilities are lessened and the VAT fraudsters. However, taxes are also being dodged in personal income tax where tax eligible small businesses employ people but do not register or pay tax while other areas include the withholding tax due on rentals.