YOUR BUSINESS IS OUR BUSINESS: Why should you demand a receipt?
What you need to know:
However, it appears that only a few drivers bother to pick up the EFD receipts (“receipts”) after refilling their cars. This is despite the law requiring customers to demand receipts whenever they purchase goods and services.
The move by tax authority and the government to press petroleum retailers to use electronic fiscal devices (EFDs) appears to have been very successful, at least in the major towns in Tanzania. However, it appears that only a few drivers bother to pick up the EFD receipts (“receipts”) after refilling their cars. This is despite the law requiring customers to demand receipts whenever they purchase goods and services.
If you have been driving in Tanzania for the past two years, you may have noticed that the introduction of EFDsto the fuel stations also came with an additional container - a dustbin! The attendants dump the uncollected receipts into the dustbins. In most of the fuel stations that I frequently refill, it is normal to find the dustbins are full. The fuel attendants struggling to push in some more uncollected receipts into those bins.
Does it matter?
To persons in business, apart from demanding receipts being a legal obligation, they also have a business interest. The receipts are necessary for them to be able to support their claim for fuel expenses. However, individuals not in business may perceive the receipts just be like any other worthless piece of paper to be dumped or burnt.
Thismay, partly, make sense because once the EFD receipt has been issued, the details of that transaction are already sent to the tax authority via the EFD management system. And so, whether an individual picks up the receipt or not, it doesn’t matter as far as fuel retailers possible tax evasion is concerned. But this argument may not be entirely true especially if one considers this in the context of the weaknesses of the EFDs implementation in Tanzania.
In one of my previous articles on EFDs in this column, I highlighted, as one of the EFDs weaknesses, the lack of customer details on receipts issued by most of the businesses.So, even if one is to pick up a receipt after refilling, the receipt bears absolutely no connection with that person or his car.
Lack of customer details on a receipt presents a big risk for tax leakage through fraudulent use of the receipts.The risk is higher when genuine customers do not demand and pick their receipts. So, the question may be how do the fuel retailers or their attendants dispose of the receipts from those dustbins?They probably burn them. But burning may not happen if they have someone who can buy the receipts!
Possible frauds and tax leakage
It is possible for a receipt from a fuel retailer without any customer details on it, to be used by any person as an evidence for fuel purchase. This makes it possible for unfaithful taxpayers to collude with fuel retailers or their attendants to buy the uncollected receipts from the bins and use them to claim fuel expenses andhence reduce their income tax. Businesses are also at risk as unfaithful employees can easily use the receipts from these dustbins tosupport fuel purchases they never made.
What needs to be done?
As customers, we can help mitigate the risksby building a culture of demanding receipt after refilling or indeed after any other purchase. This, however, may take time despite all the possible penalties. In my previous articles, I also pointed out the practical difficulties for retailers like fuel stations and supermarkets to input customer details as currently required by the tax law without compromising the flow of business. The tax authority and suppliers or manufacturers of EFD machines should find a more efficient way to input customer identifier into the receipts.
Mr Maurus is a partner with Auditax International
