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Tax Invoice Monitoring System. Avoiding the pitfalls and sustaining business

In June last year the Government announced plans to introduce an electronic invoicing system in a bid to ramp up its tax collection and over the long-term address tax evasion.

Called the Tax Invoice Monitoring System [T.I.M.S.], the Minister for Revenue told the Legislative Assembly at that time that the new system will go live in January 2020 and assist the Revenue Office collect taxes owed to the Government.

Over a year after that announcement was made by Tialavea Tionisio Hunt in the Parliament, the T.I.M.S. is yet to go live with the authorities now setting July 1 [this Wednesday] as the new deadline for the system to go online.

But the delay should hardly be surprising after Tialavea made the announcement in Parliament in June last year. All hasn’t been well on the national scene with a measles outbreak last October that lasted four months and claimed 83 lives, followed by the coronavirus [COVID-19] global pandemic that led to the closure of our international borders, a Samoa-wide state of emergency [S.O.E.] and the collapse of the global economy.

Amidst the suffocating of the local economy, brought on by the collapse of Samoa’s tourism sector due to the measles epidemic and the COVID-19-triggered shutdown of global aviation, Tialavea announced in February that it is trialing the T.I.M.S. with a local firm and intends to push ahead.

"At the year’s end, we will get the full sale of the year and the taxes that must be paid that is why this system is important and it will be utilized by all the stores,” he said.

“We intend to start with the big stores, hotels, restaurants and eventually expand to the smaller stores in Upolu and Savai’i.”

In March Prime Minister Tuilaepa Dr. Sa'ilele Malielegaoi officially unveiled the $2.3 million tala electronic invoicing system, saying it will benefit local firms that are compliant taxpayers and crackdown on those who evade paying taxes. 

Fast forward to today – over a year after Tialavea first revealed the Government’s plan to introduce the technology targeting Samoa’s private sector – members of the local business community are worried with the high setup cost of T.I.M.S. and if the technology is suited to the local environment.

In the June 28, 2020 edition of the Samoa Observer, businessman Papalii Grant Percival, who owns Natural Foods International Ltd, questioned the viability of the technology for his manufacturing company as well as the setup cost which he estimates could be within the vicinity of $20,000 tala.

"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.

"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.”

The concerns of Papalii do make sense and it is obvious that the Ministry of Customs and Revenue [M.C.R.] assumes that the T.I.M.S. is a one-size-fits-all solution to the Government’s tax collection process, when that is not necessarily the case when he highlighted the difference between retail outlets and his manufacturing company.

And what about the setup cost of $20,000 that Papalii alluded to when expressing his concerns? Except for large retail outlets in Samoa that have the potential to generate millions of tala in weekly sales, how many other businesses can make $10,00 to $20,000 a week let alone in a day to be able to afford the setup cost in the current economic climate? 

The request by the Samoa Chamber of Commerce to the M.C.R. to reconsider the timeframe for businesses to comply due to COVID-19 restrictions is logical. 

Right now there are local businesses that are on the verge of shutting or if not already closed, due to the COVID-19 global economic downturn as well as the in-country S.O.E. business restrictions. 

Push them further to the periphery on the T.I.M.S. mandatory requirements, and you might as well shut them down, leaving the Government with a shrinking tax base from which to generate future revenue to fund Samoa’s national development.

We believe in the role that taxes continue to play to fund national development in Samoa and the need for all business entities to comply with Samoa’s taxation policies. 

But it should be an equal playing field for everyone and the Government should acknowledge the difficulties that members of the private sector currently face, and consider special dispensation for locally-owned firms whose survival now hangs by a thread, brought on by the COVID-19 economic downturn and the restrictions.

At the end of the day, any Government would want its private sector to grow and naturally increase its tax base, from which it can generate more revenue to fund its development agenda. A return to the negotiating table with the Samoa Chamber of Commerce to discuss a pathway forward on the rolling out of the T.I.M.S. would be a win-win for everyone.

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