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Businesses outraged as fraud squad pulls invoicing system

Just as the holiday season kicks in, the government’s ‘fraud squad’ has plunged thousands of cafés, bars, restaurants and hotels into panic by pulling their invoicing software.
In a despatch signed by Secretary of State for Fiscal Affairs Paulo Núncio, the licence for the iECR system was withdrawn with immediate effect from last Thursday (April 24).
Any establishment using it now faces fines if it continues to do so – and the bottom line is “buy another system fast”.
But here lies another hurdle. Has the government got its eyes on other software programmes? Which other certified invoicing system can the government recommend? Will the system be deemed ‘secure’ and ‘fraud risk free’?
The answers, according to newspaper Correio da Manhã, are worrying, and at the same time tax inspectors are already reported to be “on the ground” fining companies using the iECR system as much as €37,000.
As the Resident went to press, hundreds of agents were sweeping the country in operation “Fatura Suspensa”, seizing computers, files and software licences. Other businesses affected include chemists and supermarkets.
By 6pm on Tuesday, CM reported that as many as 108 people had been charged and 128 fines given out.

IT company hits back

As the controversy reaches fever point, Time Return, the company that created the iECR software, has condemned the situation, saying the government has got it all wrong.
In a communication to his clients, Time Return boss Miguel Manso decries the government’s “abusive notification”, which he claims has seriously damaged his business. “We have already heard that competitors are taking advantage of all this as companies using our system are being forced to spend unnecessary money buying another one.
“All this has serious implications on our own business and in our dealings with our clients.”
The decision made by Paulo Núncio is understood to have followed “clear indications of the fraudulent use of the system”.
The government despatch, dated April 24, says: “The certification of an invoicing programme is a fundamental instrument that combats tax fraud, tax evasion and the parallel economy.
“In these terms, the Secretary of State for Fiscal Affairs Paulo Núncio has emitted the despatch that revokes the certification of the invoicing programme iECR, number 1194” with immediate effect.
It is the kind of heavy-handed treatment that appals the business community, although associations have been careful to measure their words.

AHRESP blames it on crippling IVA

AHRESP, the Portuguese association of restaurateurs and hoteliers, is simply advising its members to try and find a certified system that is watertight. Needless to say, it adds that it is still trying to find one itself. “There are currently more than 1,000 government-certified invoicing systems on the market,” it said.
And in a bizarre news exclusive in CM on Wednesday, it was reported that AHRESP president Mário Pereira Gonçalves “has been caught by the tax authorities” using the iECR system in one of his own businesses. Gonçalves denies this was the case and in a statement by AHRESP on Wednesday, the association says the president will be taking legal measures to restore the truth.
AHRESP secretary general José Manuel Esteves told Lusa news agency that the crux of the problem is that the government’s tax-load on the sector has “gone overboard”.
“We have tried to warn of situations like these for years,” he said. “What is inadmissible is the tax load on businesses. That is at the bottom of all this. You cannot blame the victims. The government should be reducing the tax load in the sector. Only by reducing VAT (currently at an all time high of 23%) will it be able to combat fraud and tax evasion.”
As things are at the moment, Esteves claims the government is in the process of creating a police state.
“Fraud and illegality has existed since the beginning of time,” he added. “And so it will continue. Good sense shows that the limits have been passed.”
Thus the situation for now sees thousands of bars, restaurants and cafés in states of utter quandary. “Several businesses from various sectors are currently being inspected by the tax authorities, but great emphasis has been placed on restaurants, with the media highlighting these establishments as the main target by the government,” stated AHRESP.
According to Correio da Manhã, businesses and sole traders will have paid anything from €200 to €1,500 for the iECR system. At a time when the sector is nowhere near full swing, it faces the added burden of forking out for a whole new system – and no one is telling it which system to go for.

iECR may not be ‘the whole story’

“The controversy doesn’t end here,” adds CM. “The tax authorities are understood to be looking at two other software systems that are also thought to allow tax evasion.”
These two systems are used by as many as 15,000 establishments, says the paper.
At issue are certain “buttons” that apparently can obliterate excess receipts, or convert them into bills.
As AHRESP’s José Manuel Esteves told Lusa: “We recommend that people resist situations of illegality as much as possible.”
AHRESP is trying to find a system that is ‘bullet-proof’, he explained, but as yet it has a way to go.
By Natasha Donn [email protected]