CARDS ARE TRENDING

The law "On non-cash transactions" adopted in December last year was a final chord setting the legal framework for this business, so important for the active involvement of business community and the public to the use of modern forms of payment.

The existing law will primarily affect the activities of entrepreneurs who are payers of simplified tax. The tax administration reasonably suspect the entrepreneurs in hiding the real volume of their turnovers, which leads to shortage of income to the state budget. For example, there are 770 thousand taxpayers nationwide, of which 740 thousand are payers of simplified tax. Namely, 30 thousand of taxpayers pay ₼7 billion in taxes while 740 thousand taxpayers under the simplified tax of 4% pay only ₼300 million.

Attempts of the Ministry of Tax to increase the payments to the budget from this category of taxpayers often becomes problematic since the taxpayers enter into sort of "cartel agreements" thus derailing the planned activities for the development of non-cash payments environment. Suffice it to recall that at the beginning of last year's, attempts to organize the sale of alcohol to the population by non-cash payments were disrupted due to the organization of the production deficit in retail outlets. In order to prevent discontent among the population, the government decided to postpone the introduction of non-cash sales of this category of commodities.

By the way, at that time the directors of supermarkets decided to go into a kind of counter-attack, making a proposal to stop imposing value added tax (VAT) of 18% on their sales to improve the profitability of commercial facilities. Ministry of Taxes once again had to prove the contrary. In particular, it was stated that in 2015, due to increased tax payments to the budget, the payments from shopping facilities increased in 2-3 times in comparison with 2014. But this is not the limit, as time studies conducted in supermarkets, especially those which zealously advocated the abolition of VAT, have shown that their administration is hiding turnover 15-35 times.

Therefore, non-cash payments of commercial facilities is crucially important. Under the new law, starting from January 1, 2017, the entrepreneurs of trading facilities with annual turnover exceeding ₼200 thousand will have to pay ₼30 thousand in cash, and the rest up to ₼15 thousand only.

These measures forced wholesalers to raise the price of tobacco products, which in turn led to an increase in retail prices. Although the Ministry of Taxes did not raise excise payments of any taxes, the wholesalers of tobacco products have decided to compensate upcoming costs in this manner due to the increased tax burden for the legalization of total turnover.

Not surprisingly, it was the wholesalers of tobacco products who reacted to the introduction of cashless payments immediately. Unlike other groups of commodities, tobacco products are among the few products for which retailers have to pay immediately, not after sales (on consignment). However, most likely wholesalers and retailers will increase prices, as the business in the country, as a rule, passes the associated costs on to consumers.

However, legalization of business will significantly enhance the role of tax revenue from non-oil sector to the state budget. And thus the country's leadership, in accordance with the received revenues to the state treasury will be able to go to the further growth of pensions and salaries in the budgetary organizations. Most importantly, the income data in the budget will not be linked to the world markets for oil prices.

The law also provides for the transfer of wages on a cashless basis. Failure to comply with the new rules stipulates penalties amounting to 10% of the ongoing operations in the former case, with an increase to 40% after repeated repetition of the violation.

For many, this requirement will become mandatory from April 1 this year, as the budget of the organization and for VAT presented, as a rule, large companies, have long switched to receive salaries and pensions through payroll cards (2.516 million cards by November 2016) and social ( 1.513 million) debit payment cards.

A somewhat different situation with entrepreneurs-payers of simplified tax - some of which payment is made in cash. According to the requirements of the new law, hundreds of thousands of people move to cashless payments. It should be noted that the introduction of cashless pay system entails certain costs for the citizens but they can be completely avoided by paying for purchases in stores and services by payment cards through POS-terminals or the Internet.

Undoubtedly, commercial banks acquire the ability to receive significant dividends from new customers. The winners will be in the first place, banks that have the largest number of ATMs, since it is this factor will be one of the key when choosing a credit institution to open accounts by individuals-payers of simplified tax. After all, the owners of payroll and social security cards after the accrual of funds to the account, usually withdraw them from the ATM in full.

However, commercial banks can start a campaign to attract customers by creating more attractive conditions of service of incoming funds to accounts through lowering prices and interest rates for checkbooks or offering more advantageous terms for the purchase of the debit card payment and service.

However, one should not expect that the adoption of a single law will significantly increase the level of non-cash payments in the country from 11% to 36% as in Belarus, or at least to neighboring Georgia - 25%.

For the development of cashless payments it is important to be interested in the process of both buyers and sellers, it is necessary to observe the interests of both sides, which can be accomplished by reducing tax deductions.

Owners of payment cards are well aware of the advantages of cashless payments, which provide efficiency calculations, their comfort, security and transparency. But the owners of retail facilities must also understood this. Sometimes their POS-terminals are located at such a distance that, instead of promptly paying money for the goods you can see many people standing in the queue.

In order to stimulate population to non-cash payments, it may be necessary to reduce the current VAT rate. In particular, the VAT could be reduced to 15% when carrying out cashless payments.

Certainly, the government will return to the issue of non-cash payments, and will consider the possibility of stimulating business and citizens to use cards in payment transactions.