NRA ADVERTORIAL
Despite the growing need to patronize International financial aid by developing countries around the world especially in times of economic crisis, many nations including Sierra Leone have considered domestic resource mobilization as part of their major priorities. To this end, the National Revenue Authority has in recent times dedicated most of its efforts towards the utilization of some of the most recent technologies in the field of taxation around the world. The implementation of digital reforms and its related policies have been rife within the National Revenue Authority.
Although several reforms have been implemented by the authority including the major ones as highlighted in this piece, the Electronic Cash Register (ECR) will cover for most of the deliberations in this article.
IMPLEMENTATION OF THE ELECTRONIC CASH REGISTER
In the last three years, the National Revenue Authority has witnessed massive digital revolution in different areas of operations. Part of the NRA’s activities are mainly carved from a need to build an effective system that propagates transparency as well as enhance tax administration which can be squarely achieved through digitalization. To facilitate consistency and efficiency in the data collection system, the National Revenue Authority implemented the Electronic Cash Register System (ECR) which is among the three major reforms implemented by the authority in the last three years. The Electronic Cash Register (ECR) is an electronic device designed to track sales of business transactions by businesses mainly registered for GST. The system comprises the Sales Data Controller (SDC) and the Certified Invoicing System (CIS) meant for signing receipts and sending this information to the NRA server. The electronic Cash Register device is installed by the authority as parts of its mandates under Section 25 subsection 1, 2 and 3 of the Finance Act 2018.
In his New Direction manifesto, the now president of the republic of Sierra Leone His Excellency Dr. Julius Maada Bio had made commitments to promote transparency in the country’s tax system.
CHALLENGES WITH THE MANUAL GST REGIME
It is evident that the manual receipting system poses serious threat to revenue growth and the overall tax administration system. Prior to the implementation of the Electronic Cash Register, the NRA’s key focus was directed towards increasing compliance and revenue using other techniques in the absence of automation amongst other reforms implemented by the authority. The Electronic Cash Register seems to have had the most impact on increasing revenue.
Not only that the operations of the NRA were stuck along the way as a result of the manual invoicing system and verification, the efficiency in terms of reconciliation was also majorly affected.
Verification of input GST which forms part of the activities of the NRA requires you to have access to claim Input GST payment made during relevant transaction upon clearance of goods. However, the manual system poses serious challenge to the verification of these claims in most instances because of delay in filling of returns coursed by overlaps in time.
Furthermore, time relapse in Filing Tax Returns by taxpayers had mostly left the authority with no choice but levy penalties on defiant taxpayers which have mostly been spurred from both financial and time wastages.
‘’According to Dr. Samuel S. Jibao as published in the Sierra Leone Telegraph in October 2020, businesses have been using manual GST tax Receipt to undervalue tax returns, but every transaction done with the ECR, a receipt is generated that will enable the NRA to know exactly what the business should pay’’.
To make monitoring and reconciliation of sale transactions easier, The National Revenue Authority with support from the government of Sierra Leone and the Ministry of Finance made available Five Thousand (5,000) Electronic Machines to be installed at all GST registered business premises across the country. This was thus aimed at minimizing penalties thereby promoting voluntary compliance. This action was however complemented by hosting several engagements and weekly trainings specially designed for taxpayers to ensure ease in the use of the Electronic Cash Register.
COMPLEMENTING SYSTEMS TO THE ELECTRONIC CASH REGISTER SYSTEM
Two significant Complimenting systems to the ECR are the Integrated Tax Administration System (ITAS) and the Automated System for Customs Data (ASYCUDA WORLD). Therefore, the ECR is far from operating alone. The former allows for the filing of GST returns while the ECR interfaces with the later to verify claims for input GST collected at Customs.
Among the major achievements incurred by the authority over the years is a substantial increase in tax effort from 12.3% in 2017 to 15.6% in 2021 which accounts for a 3-percentage point increment in less than four years.
This however accounted for the full implementation of only one major reform among the several reforms which are presently implemented by the authority. Following the increase in revenue generation, it is obvious that full implementation of not only the Electronic Cash Register, but all major reforms will only have a substantial increase in revenue growth and compliance. However, it is important to note that the implementation of the Electronic Cash Register (ECR) will boost revenue in several ways and more.
MISCONCEPTIONS ON THE IMPLEMENTATION OF THE ELECTRONIC CASH REGISTER
Following up on controversies and perceptions held by the public about the motives behind the installation and use of the ECR machine, the NRA Commissioner General Dr. Samuel S. Jibao in one of his statements during a Press Conference held on the 22nd of January 2022 said that ‘Contrary to what people seemingly believe, the Electronic Cash register is not an added tax but rather a means of simplifying business transactions, it is a mere calculator which records sales as opposed to the complex device the masses think it is ’’.
MISCONCEPTIONS ON THE IMPLEMENTATION OF THE ELECTRONIC CASH REGISTER.
• That the burden of GST lies on business owners which is not the case.
• That the Commissioner General’s visit to business premises was to close businesses whereas the visit was geared towards verification and installation.
• The misunderstanding of input GST as double taxation
• That the Machine is targeting Micro Businesses- there is a different regime for micro businesses.
• That GST is on all Commodities which is not the case, GST is not charged on rice, flour, baby food, certain pharmaceuticals etc
• That there is a 15% automatic increase on all goods and services if receipts are issued on the Machine
One very key among the misconceptions is that the hike in prices was because of high taxation. The Commissioner General outlined some of the steps taken by Government to keep prices within the range of the ordinary man. The removal of import duty on rice, flour, and oil. The reduction of taxes on essential commodities like Cement from 20% to 10%, iron rod from 10% to 5% and cooking gas from 5% to 0% which has thus resulted to government losing billions of Leones every year according to Dr. Jibao.
Several challenges have been faced amidst the implementation and installation of the Electronic Cash Register ranging from the reluctance in the submission of accurate taxpayer’s information, low acceptability level and rejection in the acceptance of the cash machine amongst others.
however, just about recently, the Commissioner General’s verification tour accounted for a huge turnout in the acquisition and installation of the cash machine at business premises. As of February 2022, over Two Thousand Eight Hundred Machine (2,800) were installed at business premises across the country which is over 50% of the total machines previously commissioned.
No doubt that Sierra Leone is one of the developing countries in the world that is ready to change the digitally divided society to an inclusive informed society capable of breeding economic independence.
In the phase of all the challenges, the fact cannot be dismissed that the tax paying public and not only the authority stands to enjoy the luxury and comfort from a simplified tax regime free from delay, manual errors, and data disruption.
