Cash register reform criticized by audit office

There are no preconditions ensured for successful completion of cash register reform in Latvia, the State Audit Office said in a recent report on the issue.

According to the State Audit Office, the five-year long cash register reform does not have an action plan or final deadline. The auditors also find a number of deficiencies in the reform that have hindered successful completion of the reform.

“The reform affects more than 30,000 tax payers who are using cash registers and systems every day. Before such a large reform, the state had to carefully estimate the expenses the business representatives will face, the time frame in which the changes can be carried out. The cash register form was necessary, but the audit result show that the foundation and preconditions for successful completion of the reform were not ensured,” said Chief Auditor Elita Krumina.

Even though fight against the shadow economy has been a government priority since 2010, neither the Finance Ministry, not the State Revenue Service had the sufficient capacity to implement the plan properly.

“Early this year, five years after the reform was launched, just 59 percent of all cash registers have been replaced,” the audit concluded, adding that most of the cash registers that have not been replaced yet are complicated systems that need individual solutions.

Also, the first institutions that could control whether cash register models meet the necessary requirements was registered at the end of 2016. Then, six of the earlier approved cash register models were found non-compliant with the new requirements and the State Revenue Service had to exclude them from the list. At the same time, already more than 18,000 business representatives had purchased these models.

The Finance Ministry had planned additional revenue worth EUR 18.5 million into the state budget in 2017 and EUR 17 million in 2018 as a result of the reform, but there had been no methodology developed that could make sure about such budget revenue growth.

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