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2ndMediterranean Conference on Embedded Computing , /"MECD 2013 Budva, Montenegro

GPRS Terminals for Reading Fiscal Registers

Mila ProkiUniversit of Belgrade - School of Electrical Engineering

Belgrade, Serbia

Abstract-D e u i y in non l h egi e nd non lp in e i minim l. Howeve , d e u i y in l h

egi e nd l p in e i l o no i f o y. Thi p pede i e u nove on ol devi e ed on e min l fo

ending d f om l ele oni h egi e nd lp in e o he e ve of T x dmini ion in o de o p even

x ev ion, dive ion of o igin l good f om he di i u ion

y em nd in l ion of oun e fei ed o o igin l good in o hedi i u ion y em wi hou p ymen of u om , x nd ex i edu ie . The omp i on wi h o din y l h egi e ndnon l h egi e i l o p ovided.

Keyw s-Tu ve c t ,G te m s,fsc e ste s

INTRODUCT ON

There are many reasons for t over control om the pointof view of many gove ents [1 10], starting om theobvious to ver sophisticated ones such as improved lling ofthe budget and increased tax collection, excise dut collection,custom duties collection, as well as ef ciency of tax and tradeinspectors. There is also a need for automatic accounting oftax duties and the prevention of: tax evasion, tax ud, sale ofexcise goods without paid excise duties in regular distributioncha nels, the diversion of original goods om regulardistribution ch nels, unfair competition and protection ofconsumers. The other important reasons are:

registering data about a sactions and over ofar icles (goods and services)analysis of data received om all taxpayers in order toidenti taxpayers who evade register ng of alltransactions and tu over of ar iclesoptimal utilization of human resources of taxinspectors and ade nspectors

more e cient implementation of tax lawsfaster economic developmentincreased investmentsprevention of misuse d ing regis ation of individualtransactions and over of ar icles n non scal and

scal elec onic cash registers, non scal and scalprinters.

The ma n reason for t over control om the po nt of viewof taxpayers is assistance to taxpayers dur ng sell ng, bus nessactivities, order pla ng, etc. There a e also possibilities ofsend ng: data about summar tu over of ar icles and list of

This work was partially supported by Ministry of Education and Science ofRepublic of Serbia under grant nos. TR32039 and TR32043.

Draga a ProkiSchool of Electrical and Computer Engineering of

Professional StudiesBelgrade, Serbia

sold articles to a server, computer or a mobile phone of ataxpayer. The ar icle database can be also remotely updated(price adjust ng, add ng new articles, deleting of old ar icles,etc.). There is also a possibilit of additional ea ngs of ataxpayer by re lling SIM cards of prepaid mobile phones,paying LOTO comb nations, pay ng instant lotter , show ngma ket ng messages on a additional display, etc.

Typical electronic devices for t over control are:non scal elec onic cash register and non scalprinter (together hereina er re rred to as "non scalregister )non scal elec onic cash register and non scalpr nter with the exte al scal module

scal elec onic cash register and scal printer(together hereina er refe ed to as " scal register )

scal elec onic cash register and scal pr nter withGPRS term nal send ng data about over of articles(goods and services) performed at its location to TaxA nis ation Server (TAS) us ng existing GPRS

network.elec onic scal cash register (FR) is a sta dalone

device with t o displays and keyboard. A scal printer isco ected to a personal computer (PC) or a point of salesystem (POS) and usually has only one display (for buyer).

ON F SCAL EG STERS

Data securit and data authenticity in non scal registers isminimal due to little or no responsibilit of manufacturers,distributors, sellers and servicemen to gove ent institutions,as well as their desire for bigger sales, i.e. pro ts, whichcauses the appearance of so called "popular cash registers inthe market, which directly or indirectly allow many ways of

misuse during tu over registration. n rther text"u registered means an absence of an electronic track aboutsome activit .

Par icular reasons for introduction of scal registers, omthe point of view of any gov ent are prevention ofu egistered misuses of non scal registers, PC, POS systemsand back of ce servers, which can be activated withoutleaving a trace t rough a menu or a keyboard, without openingan enclosure, since they are secretly or even publiclysupported n the original program, and which are a mostimpossible to be success lly controlled in practice, because


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they have not been certi ed by competent gove entinstitutions prior putting into use. Typical forms of misuse bynon scal registers are:

pr nting receipts in the training mode without keep ngdata on individual sold ar icles on the jo al tape (if

exists) or the jo al memor (if exists), withoutsummarizing and storing tu overs of ar icles in datamemor or a hard disk, in order to mislead customersto believe that they have got real receiptspr nting non scal receipts (non scal invoices,kitchen orders and bar orders) with individual namesand prices of articles, in order to mislead customers tobelieve that they have got real receiptspr nting duplicates of receipts, and giving them toother customers, t pically receipts with single ar icleon each of them, with apology for the lack ofknowledge n cash register, in order to misleadcustomers to believe that they have got real receipts

non pr nting, chang ng or clearing data aboutindividual sold ar icles, that have already been writ eninto the jo al memor or a hard diskchang ng the program n the program memor or aha d disk into a program allowing misuseactivation of additional programs for performingalready listed misuses on PC or POS system instead oforiginal progra s or in parallel with original programsand many others.

I ON F SCAL EG STERS W TH XTERNAL F SCALODULE

The addition of exte al scal modules for storing tu over

of articles provides the following additional misuses inaddition to the aforementioned misuses:storing already modi ed (counterfeited) tu over andtransaction data due to forged program in the non

scal register and/or POS, which directly providesmisusechange of a program for interfacing with the exte al

scal module into a program enabling misuse, sinceprograms in non scal register are not protectedagainst changedestr ction of ports for reading the exte al scalmodule, in order to prevent reading of years of dataduring audit

co nection of the exte al scal module with clonedidenti cation number and counterfeited contentdisplaying an interim sum prior to displaying the nals to be paid, in order to mislead a customer to paythe nterim sum, and a er pay ng, cancelling of someor all sold ar icles, before storing to the exte al scalmodule.

Tax nspectors must read the exte al scal module due tothe absence of automatic send ng of data to T AS, which meansthat eld work might be affected by corr tion, laziness andthe lack of knowledge. If tax inspector wants to veri the

receipt, he or she has to t pe all data om that receipt includingthe digital signat e nto PC, which is subject to t p ng e ors,or use an OCR sc ner, which is subject to OCR errors, or usea barcode sc er, which can't be pr nted on matrix pr nters, sothey can't be con olled, which will increase the r popularitfor misuse.

Utilized digital signat res are not "collision resistant , so itcan be identical for receipts with different overs, which isver simple done by changing a few letters or numbers in theheader, which mask the change of over in the a ticle area.Digital signat res are stored in the exte al scal module,while daily (Z) repor s, state X repor s, elec onic jo al andall other relevant data are stored in non scal register or POSsystem, where they can be eely changed til digital signat rebecomes identical to changed data. Daily (Z) repor s, state Xreports, electronic jou al and all other relevant data stored ona hard ive of POS or PC ca be destroyed, with apology forthe effect of v ruses brought with p r ted games by cashiers.Ha d disk ca be even formatted n order to prevent auditfollowing the same apology.

Taxpayer must pay for the change of progra n non scalregister or POS, in order to provide communication with theexte al scal module, which o en cost as much as theexte al scal module. Besides this, it is hard to force exist ngma ufact ers of non scal registers and POS to change the rso are in order to communicate with the exte al scalmodule, since they might not employ a ymore programmerswho wrote low level communication par of the program.

Exte al scal modules must be certi ed for enormousnumber of exist ng non scal registers and POS systems,which astically ncreases their costs. Non scal registers and

POS systems that have been sold in lowest quantit willbecome suddenly more popular, since no exte al scalmodule manufacturer will be nterested to pay for theircerti cation, a d they will not have exte al scal modules.Exte al scal modules are not cheap, since their price iscomparable to the price of scal registers, because 75% ofmain par s are the same (microprocessor, memor ,comm ication, power supply, por s, cables, etc.). In otherwords, only pr nter mechanism, display and keyboard aremiss ng. Addition of the expensive exte al scal module onexisting non scal registers and POS systems do not help theprevention of misuses, but instead provides the sense of falsesecurit , while increasing cost of audit and decreasingef ciency of tax inspectors:

IV. F SCAL EG STERS

Typical data protection and data authenticit in scalregisters are provided by the combination of mechanicaldevices and so ware means, de ned by an appropriate lawcomprising:

prevention of opening the scal register' enclos eand access to electronic components of the scalregister by the service seal (usually made om aspecial material with the stamp of an authorizedserviceman inser ed into the screw)


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protection of the program memor aga nst removal,change or clear by the program seal (a protective selfdestroy ng sticker in case of attempted removal)protection of the scal memor against removal,change or clear by the scal seal (usually a protective

self des oying sticker in case of at empted removal),and coat ng with an epoxy hardening compoundstor ng summar tu overs of ar icles n the scalmemorprint ng data about ndividual sold articles on the jou al tape, or storing in the jou al memorprint ng special marks ( scal logo) on scal receipts,to distinguish them om non scal receipts that mightmislead the ar icle buyerprint ng special codes (digital signat e) on scalreceipts, to enable later checking of each issuedreceiptprotection aga nst change or clear of all identi cationnumbers, records' counters, the date and time ofrecords, etc.

V. F SC L EG STERS W THGPRS E M NALS

The rst author of this paper proposed and dra ed theappropriate laws and r les stipulating the addition of GPRSterminal to scal registers (Fig. 1) in order to:

send daily report data to TAS using FTP protocolreceive the acknowledge om TAS

read command om T AS with time and date (orperiod) as well as t pe of data it will send next timetr communication another 2 times on that day, or 3time on the next day in case of an e or.

This and improved solutions are already implemented in thefollowing countries with the help of the rst author:

The Republic of Serbia (Law and rules in 2004,implementation in 2005)Republika S ska (part of Bosnia and Herzegovina)(Law in 2007, r les and implementation in 2008)Federal Democratic Republic of Ethiopia (Law in 2008,pilot project n 2009, implementation in 2010)The Republic of Albania (Law a d r les in 2009,implementation in 2010)The Federation of Bosnia and Herzegovina (part ofBosnia and Herzegov na) (Law and rules in 20 10,implementation in 2010)The Republic of Slovenia (Law in 2011);The Republic of Tanzania (Law and r les in 2012).

The system with GPRS terminals (Fig 2) providesadditional signi cant increase n tax compliance and taxcollection due to audit pla ed by the exper so ware. Thesystem mplementation has a ost zero cost (one FTP serverplus one ame relay l k) for tax adm nis ation, due topayment of communication costs by tax payers.

From tax payer's point of view, system implementation hasa ost zero cost due to subsidizing of over con ollers bythe gove ent using tax credit, which can provide fast retudue to ncreased tax collection.

Tax Administration's Tax Administration's Intranet

ADMIN

IST

ATION F T P s e r ve r

Ma in or R g ion . In tra n e t

eadqua ters Expert software

PRS modem or frame relay

).FR + T FR + T

igure . iscal registers ( R) with GPRS terminals (GT)

igure 2. GPRS terminals

VI. OR SUSES

Most of the described forms of misuse in Table ca ot bedetected without removing the service seal, opening the scalregister, comparing the scal register with the cer i ed modelkept at the competent gove ent institution and detailedinspection by experts, which causes additional expenses andrequires additional time. However, some cases of misuse canbe undetected even by experts, such as a replacement ofelectronic components (a micro controller or a memor ), incase the markings of the original and forged elec oniccomponents are identical, or differ in a small number ofcharacters (in some cases only one), or are even removed. Inaddition to that, various complicated formats of electronic and

pr nted data decelerate an audit or make it impossible.Fiscal registers with GPRS terminals according to Table Idecrease business ru ning expenses in comparison withutilization of scal registers or non scal registers, when allcosts are calculated, such as: accountant costs, purchasingcost, regular purchasing of jo al tapes, change of alreadypr nted jou al tapes with empt jou al tapes many times perday for each scal register and stocking of pr nted jou altapes, as well as change of jou al memor and scal memorever 5 years or less.


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2ndMediterranean Conference on Embedded Computing , /"MECD - 2013 Budva, Montenegro

TABLEl POSS B L Y OF M SUSEType of electronic device for turnover control

JM = Journal memory iscal Non-fiscalJT = Journal tape register iscal register with Non- scalX=Yes with GPRS register the external register-= Non important terminal scal module

=NoJM JT JM JT JM JT JM JT

Not registering turnover (by cashier) X X X XPrinting of misleading non- scal receipts X X X X Non-authorized change of the program X X X X

nstallation of additional programs 0 0 X XChange nd clea of data 0 0 X X

iscal memory access X X X 0Journal memory access X 0 X 0 X 0 X 0

Destruction ofjournal tape 0 X 0 X 0 X 0 XPrinting of counterfeited journal tape 0 X 0 X 0 X 0 X

Destruction of daily reports - X X XPrinting of counterfeited daily reports on 2 printer - X X X

Removal of the service seal X X 0 0Removal of the progr seal X X 0 0

Removal of the scal seal X X 0 0

TABLE II DEV CE CE EX LO A ON COSDUG 10 EARS

Device price d exploitation cost during10 years

A verage price is provided in

Device price (min)Device price (med)Device price (max)

iscal memory change 2x / 10yearsJournal memory change 2x / 10years

Journal tape ch ge(2 rolls each .2/day)

GPRS transfer cost (5/month)Equivalent accountant expenses

(I /month)Total expenses (max)

VII. ONCLUS ON

iscal registerwith GPRS terminal

JM I JT300400700 200

200 0

0 I 1.000600o (accounting is a partof Expert So are)1.700 2.500

The o cial data of The Republic of Serbia show that theimplementation of scal registers with exte al GPRSterminals has increased the relevant tax collection between20% and 30% depending on a year, while grey economy

spread has decreased by 30% [11]. The of cial data ofRepublika Srpska show that the implementation of scalcash registers with inte al GPRS terminals has ncreasedthe relevant tax collection for 26% in 2008, 30% in 2009,which was bigger than predicted (20%).

E ERENCES[I] Combating VAT aud in the EU, the way forward, nternational VAT

association, March 2007.[2] L. Kovacs, "Tackling VAT fraud: Possible ways forward, speech,

European Commission, Taxation and Customs Union, 2007.

Type of an electronic device for turnover control

iscal Non-fiscal register Non- scalwith the externalregister scal module register

JM I JT JM I JT JM I JT 200 300 200300 400 300600 700 600 200 200 0

200 0 200 0 200 0

0 I 1.000 0 I 1.000 0 I 1.0000 0 012.000 12.000 12.000

13.000 13.800 13.100 13.900 12.800 13.600

[3] A. Wiedow, "Tackling VAT fraud: Possible ways forward,Europe Commission, Taxation d Customs Union, 2007.

[4] Stopping the carousel: missing trader fraud in the EU House ofLords, European Union Commi ee, 20 Report of session 2006-07.

[5] Report on EU customs enforcement of intellectual proper rightsresults at the European border - 2 8, European Commission,Taxation and Customs Union, Brussels, 2008.

[6] Communication om the commission to the council, the European parliament and the European economic and social committee on acustoms response to latest trends in counterfeiting and piracyCommission ofthe European communities, 2005.

[7] Summa of communi customs activities on counterfeit and piracy,results at the European border - 2 6, European Commission,Taxation and Customs Union, Brussels, 2008.

[8] D. Merriman, "Underst d, Measure, d combat tobaccosmuggling, World bank, Economics of tobacco toolkit 2001.

[9] The relationship between ta ation, consumption and smuggling oftobacco nternational tax& investment center, J . 2003.

[10] Co onting cigarette contraband Philip Morris nt . nc., 2003.[II] V. ic, "Wireless data transfer from t payers to the tax

administration, Tribune, ntra-European Organisation of Tax Administrations 2006/1.

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