One Asia Pacific tax authority has come up with a novel way to beat the grey economy.
Nations around the world struggle to track down cash-in-hand payments that take place for work outside the tax system.
But tiny Taiwan has shoppers insisting they have a receipt for even the smallest transactions by making sure the tills print a lottery number on them.
The clever scheme has wiped out off-the-book transactions.
The government offers businesses smart cash registers that track their takings – and automatically report the amount of tax due to the government.
The customer picks up the receipt and every two months, has a chance of winning in the tax lottery. Generous shoppers can donate their receipt to charity by posting the bill in special boxes. That way, charities can boost their income if they hold a winning ticket.
Cash prizes
The cash prizes are significant – anything from $6 to $330,000 (Taiwanese dollars) – equivalent to a top prize of around £7,250.
More than 24 million prizes worth $245 million (£5.4 million) were given out in 2011.
Not only are shoppers and charities winners, but the Taiwanese government has increased tax revenues by up to 75%.
“We implemented this system because in the past, many businesses were not paying taxes,” said tax official Hsu Tzu-Mei.
“We encourage the public to get receipts that they can keep for the lottery or donate to a charity.”
The incentive does not apply to businesses turning over less than $6,600 a month (£145), which leaves a still sizeable cash economy outside the tax system. The threshold excludes around a fifth of Taiwan’s smallest business, like street vendors, market stalls and small shops.
Tax turnaround
These businesses do not offer to pay any taxes, although the government takes a 1% slice of their estimated earnings.
But major changes are underway to take the system away from paper records to the cloud by asking shoppers to register their mobile phone numbers online.
Shoppers will have their receipts stored online and gain the chance to win even bigger lottery prizes, while the tax collectors are learning even more about how much businesses earn.
The system has cleverly turned tax declaration on its head – instead of businesses reluctantly telling the government what they earn, customers are encouraged to tell the government about what they spend in return for a lottery prize.
The new paperless system is ready to start in 2014 and is tipped to increase tax revenues even more.