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. Last Updated: 07/27/2016

Cash Registers Seen as Key to Tax Battle

Prime Minister Viktor Chernomyrdin has set a series of deadlines for implementing a two-year-old plan that will force businesses to scrap old cash registers in favor of new ones that can remember up to six years worth of transactions, industry sources said.


According to Valery Kozlov, who heads the laboratory for cash-register standards in St. Petersburg, Chernomyrdin's directive mandates that Russian business use one of 85 specific models of registers from a government-approved list.


Signed late last month, the directive is both an attempt to improve tax collection and a move to protect Russian cash-register manufacturers, Kozlov said.


"The use of cash registers with electronic memories will make for more effective tax collection," Kozlov said.


Under the plan, business must replace all cash registers lacking the ability to store six years of transactions with ones from the list by the year 2000. Any register, regardless of its memory, produced before 1993 is to be replaced by Jan. 1, 1998.


The list of approved models features some foreign-made ones, including some by Samsung and Sharp that have been adapted to the requirements. But the majority of models listed are made by Russian companies.


A special government commission, established under a 1993 law on the use of cash registers, came up with the plan to phase out registers without electronic memories in 1995, Kozlov said.


"Now a total crusade has begun," said one Moscow cash-register dealer who wished to remain anonymous.


In fact, the dealer said, ongoing changes in the way business is done in Russia along with government-mandated re-registrations have forced businesses to replace cash registers at least once in the last two years.


He estimated that about 5 percent of cash registers in Moscow still lack the required fiscal memory. That number snowballs further away from Moscow, with about one-third of Russia's 1.3 million cash registers in violation of the regulations.


"Maybe [they're] in back rooms of restaurants and bars, out of sight of inspectors," he said.


For an average shop owner in the provinces, switching to a new cash register can total $200 to $300, the dealer said. But in Moscow, the price for a new register can reach as much as $700, especially if it comes with the ability to read bar codes, which the city of Moscow is trying to mandate for all consumer-product labeling, he added.


The difficulty of getting approval for cash registers has created an awkward situation for many top hotels in Moscow, which have to use two different kinds of registers -- one for their own internal accounting and the other to satisfy official requirements for cash registers, said the finance-control manager of a Moscow five-star hotel.


Many hotels have found it easier to introduce a second cash register that is officially approved than to get official authorization for the internal accounting systems they are using, the manager said.


"Thus we violate the basic principles of accounting, since putting financial data through two systems doubles the probability of an error," he said. "But then we formally comply with the law."


Such double accounting is very inconvenient, hotel managers said. It may also lend itself to abuse, according to a tax lawyer.


"This is begging for fraud," said Scott Antel, a tax lawyer with Arthur Andersen. "If you want to cheat, this is a classic opportunity."