Electronic Reporting of Turnovers in Bulgaria Detects Fraud Risk at 2000 Firms

Business | July 6, 2012, Friday // 17:09
Bulgaria: Electronic Reporting of Turnovers in Bulgaria Detects Fraud Risk at 2000 Firms The mandatory electronic connection of the cash registers of all commercial sites to the database of the national revenue authority has indicated risk of fraud at some 2000 businesses. Photo by dariknews.bg

The introduction of the mandatory electronic connection of all commercial sites to the database of the National Revenue Agency (NRA) has helped identify risk of fraud at around 2000 businesses, according to NRA data.

The software analyzes turnover information by sectors and can detect if companies' revenues  are deliberately maintained near VAT registration threshold.

The equipment can also spot businesses which report all sales in one go at the end of the month and a range of other irregularities detected on the basis of 20 risk criteria.

Some of the most flagrant breaches of law detected by the revenue authorities involved small restaurants in Black Sea resorts declaring daily turnovers of less than BGN 20.

A restaurant in the Sunny Beach resort with a total staff of 12 was found to have declared daily turnover of BGN 19, while another one located on the seafront promenade in Varna had declared a daily turnover of BGN 16.

In the three months after the entry into force of the electronic reporting requirements, the NRA registered a growth in the VAT taxable basis by BGN 4.3 B, which caused the Agency to announce that it had improved tax discipline substantially.

Each of the territorial units of the NRA already has a specialized office analyzing software data on a daily basis to determine which companies should be subjected to comprehensive inspections.

"The system allows for a much better risk assessment. This enables us to focus our controlling resources on the companies which hide turnover and the results come out only in three months. The software also saves unnecessary checks of loyal traders," said Vasil Panov, head of the Control Directorate at the NRA.

The NRA reminds that the lack of a remote electronic connection between the cash register of a commercial site and the NRA information system leads to a fine of BGN 10 000 or closure.

The penalty for traders failing to issue cash receipts is a fine of up to BGN 3000.

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Tags: National Revenue Agency, NRA, tax, VAT, VAT fraud, tax evasion

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