Motivating consumers to check invoices

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In order to support the operation of certified cash registers, the Financial Administration (FA) launched a crowd-sourcing campaign in 2016 for the purpose of motivating consumers to receive an invoice, take it, check whether it is correct and send it to the FA. This way, every citizen was able to contribute crack down on invoice fraud and to reduce the shadow economy (which is the part of an economy involving goods and services which are paid for in cash, and therefore not declared for tax.)

Innovation Summary

Innovation Overview

In the fight against the shadow economy, in 2016 we introduced a system in which certified cash registers are connected via the internet with the server of the Financial Administration of the Republic of Slovenia. The latter confirms and stores data on invoices issued in cash transactions while they are issued in real time. This method prevents items on issued invoices from being subsequently deleted or corrected. However, certified cash registers would not be effective if the provider of goods or services did not issue an invoice to the consumer or issued it via a register that is not connected to the Financial Administration's server.

All companies and business entities operating with cash have been obliged to use certified cash registers in Slovenia since 2016. There are more than 50,000 business entities and companies using certified cash registers, and they issue approximately 3 million invoices every day; therefore, it would be extremely difficult to implement effective supervision of potential violations only with the help of the Financial Administration's inspectors (there are 350 inspectors).

Therefore, we faced the challenge of how to motivate consumers in four tasks: to demand the receipt or an invoice upon the purchase of goods or services, to take it, check whether the invoice is accurate, and to send it to the Financial Administration. From the aspect of the Financial Administration controlling the shadow economy, it is very important that consumers check invoices, because this way consumers provide information about who issues inaccurate invoices, what these inaccuracies are, and who does not issue invoices at all. Thus, we can increase the effectiveness of supervision, because we direct inspectors on the basis of analysing the data received from consumers only to persons subject to inspections who issue inappropriate invoices or do not issue them at all. Since consumers can check issuers of invoices at any given moment, the issuers rarely decide to commit fraud at the time that invoices are issued. The probability of discovering their irregularities is therefore much higher than usual.

In addition to other measures that have been simultaneously implemented (the legal obligation to take invoices, special notifications about taking invoices at cash registers), we wanted to take a positive approach in motivating consumers to take invoices. Therefore, we implemented tax literacy activities for young people in primary and secondary schools, and organised a prize competition (random awards for tax compliance). We were aware of the fact that we would have problems attracting mass cooperation of consumers only with cash prizes. Therefore, we introduced a few novelties in the campaign, which made it interesting to collect and check invoices. We also wanted to attract younger generations, since the aim was to influence the strengthening of tax culture. In order to motivate consumers to decide to actively cooperate in checking the compliance of issued invoices, we introduced an interactive mobile application "Preveri račun" (Check the invoice), which enables simple and fun checking of invoices by scanning the QR or bar code of the invoice. Since 2016, every invoice in Slovenia has had a special QR or bar code. When a consumer scans it with a free mobile phone application, the latter is connected with the server of the Financial Administration and quickly receives information to the mobile phone whether the issued invoice has been confirmed by the Financial Administration and what data were used to confirm it. If the feedback from the Financial Administration's server matches the data on the issued invoice, the consumer confirms on the mobile phone that the invoice is a match; in the opposite case, the consumer indicates that the invoice does not match it. The consumer can also use the application to photograph the invoice. This way, the Financial Administration simultaneously receives information about the accuracy of issuing invoices from consumers.

The Financial Administration is very satisfied with the response of consumers: in just one year of this campaign, they have checked more than 21 million invoices. Considering the fact that Slovenia has 2 million inhabitants, statistically, in one year, every Slovenian checked and sent 10 invoices to the Financial Administration. In 2016, 112,887 consumers (5.6% of Slovenia's population) downloaded the application "Preveri račun" to their mobile phones to check invoices and cooperate in the prize competition. In one year, they checked the invoices of 75% of users of certified cash registers at least once. In other words: consumers used their mobile phones to check three quarters of all issuers of invoices who use certified cash registers.

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Year: 2016
Level of government: National/Federal government

Status:

  • Diffusing Lessons - using what was learnt to inform other projects and understanding how the innovation can be applied in other ways

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