Recently, the Malawi Revenue Authority (MRA) admitted on its official website that it will more strictly and systematically implement the Electronic Fiscal Device (EFD) Project, making every value-added tax (VAT) taxpayer to procure, install and use EFD machines mandatorily.
It is reported that tax evasion by non-issuance of tax invoices especially by small to medium taxpayers is the biggest challenge in VAT administration these years. Implementing the EFD project is helping to improve this situation as sales transactions would be monitored electronically through a GPRS modem at MRA's central server.
This is not the only country adopting the EFD project. For example, the United Kingdom, Russia, Japan, Nigeria, etc. are implementing tax control policies, and what are the EFD project and its benefit?
What is Electronic Fiscal Device? (EFD)
Electronic Fiscal Device (EFD) means a machine designed for use in business for efficient management controls in areas of sales analysis and stock control system and which conforms to the requirements specified by the laws.
Types of Electronic Fiscal Device (EFD)
Electronic Tax Register (ETR)
The device is used by retail businesses that issue receipts manually.
Electronic Fiscal Printer (EFP)
The device is used by computerized retail outlets. It is connected to a computer network and stores every sale transactions or details made in its fiscal memory.
Electronic Signature Device (ESD)
The device is designed to authenticate by signing any personal computer (PC) produced financial documents such as tax invoices. The device uses a special computer program to generate a unique number (Signature) which is appended to and printed to every invoice issued by the user’s system.
Electronic Fiscal Pump Printer (EFPP)
The device is designed for use in Petrol Stations. It is connected to a pump and printed every receipt during the sale transactions.
Benefits of Electronic Fiscal Device (EFD)
Computerizing the Tax Auditing Process
The verifiable, authentic electronic files and the fiscal memory device make it possible for the tax authorities to use computers and software to verify instantly a large number of invoices (or retail receipts digitally signed) for their authenticity to the last letter and digit.
Because of the nature of the fiscal device, much fewer disputes arise during a tax audit. The fiscal memory can provide indisputable evidence for the innocence or guilt of the user.
Tag: Electronic Fiscal Device, EFD project, MRA, VAT, Electronic Tax Register, tax control, TPS575
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