Businesses say tax tech switch unrealistic
Amid a severe economic downturn, Samoan businesses say a Government requirement for them to switch to a new accounting and invoicing system is proving costly and unrealistic.
The new Tax Invoice Monitoring System (T.I.M.S.) will be required to be used by the first group of 210 businesses by July 1 next week.
But businesses say they are scrambling to meet the new requirements and incurring costs.
The initiative was brought in to improve the rate of the Government’s business taxation collection and tackle the “hidden economy” which makes no contribution to public coffers.
But despite pleas from the business community, the Ministry of Customs and Revenue (M.C.R.) is insisting the deadline will not be delayed.
Failure to comply with the new system will expose businesses to heavy penalties of between $5000 to $10,000 depending on the businesses' annual turnover according to Government legislation.
One business among the first group to shift to the new monitoring system is a manufacturing company, Natural Foods International Ltd at Savalalo.
Owner, Papalii Grant Percival, said compliance measures outlined by the Ministry are proving difficult to integrate into the company's current accounting systems.
"The reality is that we can do it, but the T.I.M.S. system is set up for retail outlets with a fixed point of sales equipment [like] chemist shops, supermarkets, whereas we're a manufacturing company," he said.
"For us, we manufacture and then we go out and retail it, we don't know what somebody's going to order until we get there.
"There is no point of sale [software] that links to my accounting system but there's no point of sale and accounting system that's linked to manufacturing because it doesn't work. Nobody does that."
Papali'i said for his business to be fully compliant with the new system, the up-front cost may reach $20,000.
"I didn't spend very much because to do it properly, it would cost me something like $20,000 and during COVID-19? I [am not] going to spend $20,000," he said.
According to M.C.R., any additional costs incurred to comply with T.I.M.S. may vary depending on what type of cash register or Point of Sale they a business is currently using and is a "one-off at the time of installation but guaranteed affordable"
But some businesses dispute that statement.
"But it's more than that because that's just a straight up-front cost because then I have to retrain all my staff on the new accounting system, I've got to get an integrated software point of sale [system], but there isn't any. It's impossible," said Papalii.
"That was the point I kept trying to find out, I kept asking people: do you have an integrated software that has a point of sale that handles manufacturing? They said no. Point of Sales are for retail not for manufacturing."
The Ministry does offer a free Point of Sales system that can run on a mobile phone application which will ensure businesses minimum compliance with the new regulations.
The TaxCore Free point of sales device allows for receipt uploading to be run from an Android and Apple device. Its features include the ability to track record payments, send and receive invoices and issue quotations and refunds.
But some businesses say that the free option is simply not able to be integrated with their business because it is not compatible with their existing accounting software or nature of their trade.
Papali'i praised the logic for better tax collection behind the initiative but said its rollout had been poorly managed.
"It seems it hasn't been thought through and it seems it hasn't been finalised," he said.
The Samoa Chamber of Commerce has also requested the Ministry to reconsider the timeframe given for businesses to comply given the current circumstances under COVID-19 restrictions.
In a survey, they conducted it showed that out of 117 businesses observed, 44 per cent of respondents reported that their business does not currently have a point of sales software and thus resort to manually generating invoices through the use of receipts, cashbooks, and the use of Excel.
According to the M.C.R., businesses are able to request an extension if they have at least completed the enrollment process and have a valid reason for why they are unable to meet the deadline.
"Only businesses that have completed the enrollment process and submitted supporting documents confirming that the delay is due to vendor’s inability to set up their [device], or legitimate problems with obtaining the necessary hardware, will be considered for an extension by the Chief Executive Officer," a Ministry statement said.
Businesses with no invoicing system are advised by the Ministry to consult published material to select the best option that suits the nature of your business activities.
Those businesses running existing point of sales and invoicing systems which are incompatible or accredited by the M.C.R. have been told to contact their providers for updates to make their products compliant.
But according to a Chamber survey of businesses that reported contacting their software provider, the majority reported being told they were not able to confirm a time frame to do the work necessary to enable T.I.M.S. compliance.
Other providers are offering solutions already compliant with Government requirements.
Currently, Connect I.T is offering to implement a point of sales device for their clients after joining forces with Link Technology Australia and Edge Business Solutions in Fiji.
Under their partnership with LinkPOS in Australia and as part of a "COVID-19 relief package", businesses are able to receive a discount of up to 100 per cent on software licenses if they sign up with Connect I.T. and LinkPOS.
Meanwhile, Business System Ltd at Saleufi if offering an instore full hardware and software package of another point of sale system, IdealPOS, which is already compatible with T.I.M.S. and is available at a cost of at least $9,500.
Stores of data collected by the T.I.M.S. is expected to expedite any queries members of the public have about their tax obligations but also lower the cost of tax collection and auditing.
Each receipt provided via the system will be stamped with its own unique Q.R. (Quick Response) code which can be used to verify the receipt’s authenticity; the code will embed information about the items purchased in a given transaction.
It is intended to reduce reliance on hard copy invoices and receipts and therefore lessen the industry’s record-keeping costs.
T.I.M.S. was introduced in 2019 and cost the Government $3 million tala and launched in March this year.
T.I.M.S. was developed by a Serbian company, Data Tech International, which signed a contract with the M.C.R. last October.