ELECTRONIC SALES SUPPRESSION: A THREAT TO TAX REVENUES

ELECTRONIC SALES SUPPRESSION:
A THREAT TO TAX REVENUES
Electronic sales suppression techniques facilitate tax evasion and result in massive tax
loss globally. In the retail sector, point of sales systems are an important business tool and
are expected to contain reliable data. In reality such systems not only permit skimming of
cash receipts, much like a manual cash box, but once equipped with specialized “sales
suppression” software they facilitate far more elaborate frauds. Tax administrations are
losing billions of dollars through unreported sales and income hidden by the use of these
techniques.
This report describes the functions of point of sales systems and the specific areas of risk
to tax administrations. It sets out in detail the electronic sales suppression techniques that
have been uncovered, in particular “Phantomware” and “Zappers”, and shows how such
methods can be detected by tax auditors and investigators. The report also considers a
number of strategies adopted in different countries to tackle electronic sales suppression
and highlights best practices. In particular, it makes a number of recommendations to
countries for addressing this important area of risk
Table of Contents:
Executive Summary
Introduction
Point of Sales Systems
Electronic Sales Suppression Techniques
Detection Strategies
Government Responses
Conclusions
www.oecd.org/ctp/taxcrimes