Electronic till system in shambles

Retail

The embattled online cash register system was slowly edging towards what could possibly be called a viable state, when the regulator decided that 80,000 already ordered tills aren’t fit to meet legal standards. All parties are flustered; businesses and tax revenues alike are in peril without any explanation about what prompted the new examination nearly a month after the system was launched.

As if the delays endured thus far and the multiple hurdles placed in the arduous launch path of the electronic cash register system weren’t enough, the regulator threw yet another spanner in the cogs and terminated previously valid till orders for thousands of businesses. Even the government has admitted that there are many cracks in the system, while companies are, understandably, up in arms.

Some 80,000 business owners had to learn from news sources that, despite their best efforts to comply with legal regulations, the centrally-approved new cash registers they ordered aren’t compatible with the expected parameters after all. The overseer of the implementation, the Hungarian Trade Licensing Office (MKEH) announced that it had revoked the licenses of already certified models at the end of January, saying the evaluation identified security flaws in the devices distributed by the two affected companies, Alt Cash and Japan Cash, without going into greater detail.

“The identified illegal factor poses a serious threat to the goals determined by the government through introducing the online cash register system. Although there have been numerous orders submitted for the models in question, there were only a few dozen of them actually put into operation,” MKEH said in an attempt to reassure the public.

This proved little consolation to the retailers, who have already paid a deposit on orders that the vendors now, in all likeliness, won’t be able to repay, since they have no products that are marketable in the wake of the ruling. Alt Cash, formerly the market leader for cash registers, now finds itself without a product.

The ministry’s special committee overseeing the implementation of the electronic registry system was summoned to an emergency meeting, which yielded little in results, apart from promising retailers who have already ordered machines from the newly disqualified product line that they will suffer no unfair losses and subsidies will still be available for a substitute device.

Eyes on the money
The controversial online cash register system took effect in January, burdened with a troubled run-up featuring repeated delays and other issues. Already, many businesses have closed down as a result of the new system and the costs presented by the new tills, while the government insists that there is nothing to worry about.

The system is to link all points of retail to the tax authority’s servers, all but fully eliminating tax evasion in the process. The roll-out saw multiple delays, since businesses had difficulties navigating the system and acquiring the necessary equipment.

The Economy Ministry blamed the delays on vendors who were unable to deliver the necessary solutions and technology on time and accordingly, refused to extend the introduction deadline. As a result, there are still many stores that have yet to get connected, aside from those affected by the over licensing changes of heart within the regulating bureaucracy. NAV promised these companies leniency for the time being, without going into specifics.

“The goal is not to sanction. The Economy Ministry and NAV’s main task is to support the cash register installation and to help manufacturers and other involved businesses implement the introduction as soon as possible,” the ministry told the Budapest Business Journal.

Shaken system
It is unclear what the authorities’ approach will be, especially in light of the latest development, which some experts said could postpone the nationwide roll-out by months.

In line with the leniency principle, auditors are active but mostly resort to warnings if they are satisfied that the retailer in question is taking adequate steps to meet the legal requirements. The ministry has a measly HUF 4.5 million in total penalties on record between November and January.

The ministry’s responses arrived before the announcement of the surprise withdrawal of the 80,000 cash register licenses (all for various Samsung models), meaning the rules of inspection that were already hanging in the air have become even more vague.

In light of the latest bombshell, if predictions of further lengthy delays prove accurate, the government may even have to revise its economic projections, since the required VAT amounts won’t be coming in.

The ministry remains optimistic, noting that the closure and launch of businesses is a natural phenomenon in the economy and isn’t directly linked to the e-till regime. It cited 2,333 business closures on record in the first three weeks of January compared to 4,590 in 2013.

It is also confident that even with the abundance of hangups, the system will lead to an increase in the volume of centrally collected taxes, making the effort a worthwhile venture.

Update: On Thursday, January 30, National Economy Minister Mihály Varga announced the dismissal of Péter Kiraly from his position as general director of MKEH in light of the e-till catastrophe.

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