The Es Solo Value-Added Tax (VAT) Switch creates a unique transaction ID for each transaction instance and transmits all the relevant transaction information (consistent with the government requirements: date, time, amount, form of payment, currency used and exchange rate if in foreign currency, check number of similar if used, account numbers from where the payment comes and will be deposited, tax ID of the bank where the payment is deposited and Es Solo-generated unique transaction ID). A key advantage of Es Solo’s proposed solution is that the channels through which VAT payments normally travel will not change; payments will still run from the customer through the payment gateway and into the seller’s bank. The change is that Es Solo’s VAT Switch creates new instructions for the funds as they leave the payment gateway, with the cost of goods arriving in the seller’s bank account and the seller’s bank transferring on to the national tax authority the applicable VAT indicated by Es Solo’s VAT Switch. National tax authorities can therefore both reduce the frequency of VAT evasion and improve their revenue streams through VAT remittances at the time of transaction, rather than waiting for the traditional VAT reporting period to close.
In many developing markets around the world, local and national level governments struggle with the administrative burden of both disbursing government program funds as well as with the collection of population-to-government (P2G) tax revenues. Through the deployment of Es Solo’s prepaid card programs and advanced digital identity and compliance tools, governments can efficiently and safely disburse funds such as welfare funds and pension payments. Equally, for government employees receiving salary payments from local or national government departments, the government’s income tax collection can be automated such that all local taxes are collected at the point of disbursement, dramatically reducing the administrative burden on government tax collectors and also bringing the rate of tax non-payment to near zero.
Es Solo’s suite of potential tools to help governments include:
Prepaid card issuing programs
Es Solo’s prepaid card programs facilitate the distribution of government salaries, welfare and other benefits. These programs can reduce the administrative burden upon government departments and increase the speed and security with which government disbursements are made. Es Solo’s prepaid card program management platform further delivers tools to monitor if disbursements are reaching the intended recipients and how those disbursements are consumed by the recipients, thus providing valuable data to national governments about the needs and habits of its workers and welfare and other disbursement recipients. The issuance of prepaid cards (along with the accounts to which the cards are connected) also opens an avenue for easy P2G payments through allowing cardholders to make transfers to the government as required by law. Finally, if desired, the Es Solo card management platform can be configured such that income and other taxes on salary payments to government workers are collected at the time of salary disbursement, improving income tax payment compliance and government cash flow cycles.