Lithuania had a similar experience as lately as 10 years ago. Then, expansion of the cash registers’ sphere affected almost all businesses in the country, including small entrepreneurs who traded on the markets. Of course, the first wave of discontent was quite strong. However, mutual understanding was reached due to high-quality communication and liberalization.

What particular steps facilitated the faster and easier introduction of cash registers in Lithuania and other countries?

Communication

Qualitative changes doubtlessly always require proper explanation thereof. Communication with business associations and the public becomes the responsibility of public authorities.

But above all, it is the formation of tax culture in which each taxpayer clearly understands the essence and purpose of fiscalisation. It is useless to expect that a society that is accustomed to evading the payment of taxes will change its ways instantly because of the new rules.

At the same time, learning how to use new services, their popularisation, and demonstration of what positive changes they are capable of bringing about remains an important component.

National lottery

Certainly, the so-called receipt lottery is one of the most popular steps in the popularisation of fiscalisation.

The principle is very simple — having received a cash register’s fiscal receipt, any buyer can take part in the national lottery. They can register their receipts in the lottery system, and the system will, at certain intervals, determine the numbers of receipts whose owners become winners. The Prizes vary from country to country. For example, in Georgia it is 4 prizes of EUR 20,000 each, in Portugal, an Audi A4 is raffled off every week, and in Malta, the amount of a gift is the amount in the cheque multiplied by 100.

Such an initiative created a demand from business clients for receipts in the hope to win the lottery; they began to more actively require that the entrepreneurs use cash registers. According to the tax authorities of the countries that had introduced the lotteries, their effect was 10.3% in Georgia, 9.5% in Malta, and 21.4% in Slovakia.

Add to this the costs of a national lottery pay off in a year after its introduction. In Lithuania, a total of EUR 710,000 was spent on the entire project, taking into account the prize fund. The budget received EUR 3.2 million of declared revenues from VAT from the public catering sector, alone, over the first year of the event.

Relaxing other rules

Another simple rule for successful change is that stricter rules in one sphere can be offset by their relaxing in another.

In particular, this applies to bureaucratic procedures, where payers are able to make most of the mistakes. For example, in tax returns.

Simplification of the tax reporting procedure, maximum automation of the process of filling out the tax returns can help society to respond to other changes with greater understanding.

Also, tax administrations, among their services, offer the taxpayers pre-completion of tax returns, which is based on data received by the tax administration through cash registers. An entrepreneur will only have to confirm the automatically generated tax reporting and submit it to the State Tax Service.

Material consideration

When introducing cash registers for entrepreneurs in the country, Lithuania compensated them for the cost of classic cash registers. At first glance, that was the perfect step to motivate businesses.

Today, Ukraine is in a favorable situation, where, together with the expansion in the use of cash registers, entrepreneurs are able to use free e-cash registers at the same time. It does not only reduce costs and save time for accounting and maintenance of a cash register but also makes implementation of new rules easier than in other countries.

Together with that, it remains much to be done towards both taxpayers and the general public. The EU4PFM Project is providing its support to Ukraine all along the way, in the country’s aspirations towards transparent and successful changes.

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The EU4PFM Project helps implement the ECR reform in Ukraine by providing expert support in the development of a regulatory framework, methodological recommendations, and financial support for the development and improvement of IT solutions for ECRs.

Paulius Majauskas
EU4PFM International Key Expert on Tax reform