Quebec's Module D'Enregistrement Des Ventes (MEV): Fighting the Zapper, Phantomware and Tax Fraud with Technology

29 Pages Posted: 23 Feb 2009 Last revised: 3 Dec 2019

See all articles by Richard Thompson Ainsworth

Richard Thompson Ainsworth

NYU - Graduate Tax Program; Boston University - School of Law

Date Written: February 17, 2009

Abstract

On January 28, 2008 the Quebec Minister of Revenue, Jean-Marc Fournier, announced that by late 2009 the MRQ will begin testing a device, the module d'enregistrement des ventes (MEV) that is projected to substantially reduce tax fraud in the restaurant sector. By 2010 or 2011 MEVs will be mandatory in all Quebec restaurants, where they will assure accuracy and retention of business records within electronic cash registers (ECRs).

This paper moves beyond a discussion of the variety of sales suppression programs in use - zappers and phantom-ware. The concern here is on enforcement efforts, particularly the MEV. The intent is to assess the workability and effectiveness of the MEV solution by contrasting it with solutions adopted elsewhere.

Two policy orientations guide enforcement actions in this area - one approach is rules-based; the other is principles-based. They are not mutually exclusive - degrees of blending are common. Rules-based jurisdictions adopt comprehensive and mandatory legislation regulating, and/ or certifying cash registers. Jurisdictions taking this approach include Greece and Germany. With the adoption of the MEV, Quebec will also fall within this group. Principles-based jurisdictions rely on compliant taxpayers following the rules. Compliance is enforced with an enhanced audit regime. The Netherlands and the UK fall into this group.

After presenting a rough schematic of a how a zapper or phantom-ware facilitates a skimming fraud (absent many of the details considered in earlier papers), this paper will consider three rules-based enforcement approaches: the Greek "fiscal electronic devices" or FEDs, the Quebec MEVs and the German "smart cards." The Dutch principles-based approach which is also favored by the UK will provide a policy contrast.

A final section will consider how CSPs in a SSUTA framework could be used to achieve very similar outcomes as is currently realized under either the rules-based or principles-based approaches. CSPs in a SSUTA context blend the rules-based and principles-based approach within a unique (private sector) solution.

Keywords: Tax fraud, MEV, Module d'enregistrement des ventes, Zapper, Phantom-ware, Smart card, VAT, SSUTA, CSP, Germany, Quebec, Greece, ECR, POS System, Skimming

JEL Classification: H00, H20, H26, H71, K34, K42, O23, O33

Suggested Citation

Ainsworth, Richard Thompson, Quebec's Module D'Enregistrement Des Ventes (MEV): Fighting the Zapper, Phantomware and Tax Fraud with Technology (February 17, 2009). Boston Univ. School of Law Working Paper No. 09-09, Available at SSRN: https://ssrn.com/abstract=1345123 or http://dx.doi.org/10.2139/ssrn.1345123

Richard Thompson Ainsworth (Contact Author)

NYU - Graduate Tax Program ( email )

Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
214
Abstract Views
3,023
Rank
258,339
PlumX Metrics