ZRA is a government institution under the supervision of the Minister of finance of Zambia. Its duty is to collect taxes on behalf of the government of the Republic of Zambia and is the main source of financial revenue of the Zambian government. In 2017, Zambia's tax revenue reached 37.7 billion kwacha, accounting for 15.18% of GDP, and exceeded the target of 36.6 billion kwacha. With the trend of tax control equipment reform in Europe in 2016, ZRA is ready to launch the tax control equipment management system in 2018 financial budget to further expand the tax base, increase tax amount and reduce the tax cost of the added tax, and effectively identify the tax losses caused by false VAT deduction relying on information technology.
Zambia has a population of nearly 20 million, but the total number of Tax Bureau officials is less than 2000, so digital facilities are urgently needed to improve their work efficiency. Further more, due to the lack of unified invoice management standard before 2018, the different invoice specifications and styles make it difficult to manage, and taxpayers manually fill in invoices for tax declaration and tax refund, which is error-prone. In addition, because it is difficult for the tax bureau to identify false invoices, excessive tax rebate leads to tax loss.
In 2017 ZRA refunded clients K6.7 billion in Value Added Tax (VAT) refunds and between 65 and 70 percent of the money refunded to the mines. Going forward, the government through ZRA will allocate more resources to dismantle outstanding VAT refunds and minimise accumulation of refunds. Said by ZRA Commissioner General Kingsley Chanda. "Most businesses had not been consistent in issuing tax invoices, hence ZRA need a measure to improve tax compliance and strengthen ZRA’s revenue collection from traders".ZRA Commissioner domestic taxes – Moses Shuko , He urged citizens to demand a tax invoice each time they bought a product from a shop as this was vital to ensuring shop owners complied with the country’s tax regulations. Based on these challenges, ZRA is going to implement the Tax Invoice Management System (TIMS), which aims to combat tax evasion by small to medium companies by standardizing and capturing all invoicing processes and getting rid of non-compliant manual cash registers. Through the use of Electronic Fiscal Devices (EFDs), ESD(Electronic Fiscal Device), and Virtual Electronic Fiscal Devices (V-EFDs) the ZRA envisions that these devices will curb tax evasion as every transaction will be transferred automatically to the Authority in real-time.
Inspur's invoice management solution has established a unified invoice management platform in Zambia, formulated invoice management specifications, reduced the workload of taxpayers as well as tax bureau staff, improved work efficiency, data accuracy and service quality, the platform can effectively identified false invoices, prevented tax evasion, and greatly improved tax efficiency and tax amount.
This solution provides three kinds of products which are Fiscal Cash Register, Sales Data Controller and Virtual-Electroni Fiscal Device API for small and medium-sized taxpayers, which helps taxpayers realize the demand of fast access to invoice management system. Based on the digital invoice data and big data technology, the platform provides a visual data analysis platform to help the tax bureau personnel carry out statistics, monitoring and tax evasion warning more intelligently.
The ZRA IMS defined a standard receipt fiscalization process to monitor and control the sales details in the market. A ZRA registered invoice should contains some features which contain the unique invoice identity, standard time reference, accredited tax calculation, and digital signature. all the registered transaction will be assigned with unique invoice code and number as the ID for IMS, then the issuing time will be synchronized with IMS in case of the data and time manipulated in tax fraud behavior. To prevent revenue loss caused by tax amount calculation, IMS defined a standard algorithm for tax calculation and embed it into the FCR, ESD and V-EFD solution. For the invoice security aspect, IMS also adopted the certificate and digital signature technology to guarantee the transaction data.
Fiscal Cash Register (FCR) is an efficient hardware device which is designed for commercial use in the field of sales analysis and inventory controls. FCR enables taxpayers to comply with national tax laws, guarantee correct generation, reliable storage and secure transfer of business data. Besides, FCR can meet the requirements of Revenue Authority management and tax data audit. All the transaction data will be signed and uploaded to the Revenue Authority by using FCR in business. In addition, it will provide other helpful functions for taxpayers to manage their stock, customer and reports easily.
Electronic Signature Device (ESD) is a hardware device whose main function is to sign invoices and deliver invoice data to the Revenue Authority. From the technical point of view, SDC is a middleware component that connects POS to Invoice Management System and enables standardized interface integration. It will provide a simplified interface with POS system and improve the integration speed.
ZRA IMS provided an opening API called V-EFD (Virtual Electronic Fiscal Device) for easy integration among ERP, POS system and other fiscal devices. The opening API makes it possible to fiscalize receipts in a variety of scenarios. With the V-EFD integration, ZRA had completed the transaction data registered in almost five supermarkets in Zambia, whose tax amount occupies 50% of the annual revenue.
5) Big Data Analysis Platform
Based on the received transaction data in IMS database, Inspur provides a big data platform to handle the multidimensional analysis of the taxpayer such as the basic attributes, tax-related behavior data and fiscal status. Also, it is able to make good risk assessment and prediction based on detailed taxpayer’s enterprise architecture and business chains analysis. The tax officers can get the real-time activities, statistics, alarms and decision support from the big data platform.
ZRA surpasses its revenue target after adopting Inspur TIMS. ZRA Commissioner General Kingsley Chanda said during the end of year review for 2019 in Lusaka that the Authority collected K63.8 billion in gross revenue while the refunds stood at K10.9 billion resulting in a net collection of K52.9 billion during the year. The net collection of K52.9 billion translates to 17.6% of the projected GDP estimate for 2019 compared to the targeted 17.3%. “This outturn is attributable to higher than programmed revenue collections under indirect and trade taxes which posted surpluses of K264.8 million and K906.3 million, respectively,” he stated. The growth in revenue for the year to date period compared to the same period in 2018 stands at 9.3% compared to the targeted growth rate of 7.0% revenue projected for the same period.