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When travelling, I am often offered to pay in cash, with the risk of the business I am completing the transaction not paying VAT.

On the other hand, if I pay by credit card, there is a non-zero risk that the credit card provider is eluding the corporate tax payment (see just one example of receiving 3.3 milions tax credit over revenues of around 8'000 milions I found with 2 minutes google research).

How to minimize the impact, disincentiving unethical behavior (i.e. giving the smaller reward to unethical behavior)?

Disclaimer: I consider tax elusion unethical, I equate unethical to criminal.

Disclaimer/background clarification: when paying by credit card, the customer may have no fees, but the business receiving the payment has to give some percent/fixed aumont to the credit card provider. Considering that the business may have a net profit on the price you pay ranging from 5% to 100%, a credit card fee of 1% may be taking away something from 20% to 1% of the net profit of the business. Yes, a business having 100% net profit, i.e. no cost on their services, it is a purely imaginary business.

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    The premise of your question is flawed in several areas. 1) It assumes from the outset that accepting cash is tantamount to fraud. 2) Your example has nothing to do with accepting cash, but instead global accounting practices, which while maybe distasteful, are in fact legal, 3) Your personal belief that unethical equates to criminal is only your belief 4) The actual question ("how to ..") is so broad to be effectively unanswerable (and as per @ajd) the answer you opposed is arbitrary.
    – Peter M
    Commented Oct 21, 2021 at 12:37
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    This seems more like a rant than a question.
    – Kyralessa
    Commented Oct 21, 2021 at 13:08
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    If you compare the charges debit and credit cards charge with the model of something like WeChat you might conclude that you are contributing to (legal) criminal behavior by using a card. Commented Oct 21, 2021 at 13:16
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    @SpehroPefhany now I see your point. I added a clarficiation. Not everyone is aware that creditcards are free for the client, but the business on the receiving end has usually fixed fees + some % on the total amount fees
    – EarlGrey
    Commented Oct 21, 2021 at 13:25
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    @EarlGrey Credits Cards are not necessarily free for the client, as if you are traveling the CC company will add on whatever fee they deem reasonable for performing a currency conversion between where you made the purchase and where the CC is based.
    – Peter M
    Commented Oct 21, 2021 at 13:32

2 Answers 2

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It depends on the type of expenses.

On restaurants and hotels just ask for a receipt (and tell you need for tax reasons). Usually they provide you something real, and because both of you use the same reason "less taxes", they cannot really argue. Also tell in advance if you can pay with card (and maybe explaining that you want to keep some cash for minor transactions). In this case, if they refuse ("terminal is not working", just change restaurant: this is a major incentive: the lost income is very probably larger than the taxes they would "save").

For minor purchases, the two methods become inconvenient, so use your gut feeling (and maybe ask for receipt). but in such case, also the "stolen money" is minor. But I tend not to like such countries, and world is big enough to choose a new country to like (or dislike). OTOH lack of trust on government (and corruption) is not a problem tourist could solve (but we can help the honest people).

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  • thanks for your answer. I do not agree 100% on "the "stolen money" is minor", beacuse both corporate taxes and VAT are proportional to the amount, so apart from rounding errors, the stolen money cumulative amount is similar. The main issue I have is that I have a definite lack of trust on my government, especially regarding corporate accountability, so it is a resident problem which (in principle) I could solve :) !
    – EarlGrey
    Commented Oct 21, 2021 at 13:03
  • @EarlGrey: I mean: for my minor purchases. Obviously it add (with all other customers), but many tourists are not so ethical, so I do not think I can do a difference (but with hotel, restaurants, and "large" expenses).. Commented Oct 21, 2021 at 13:08
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To minimize the global reward of VAT/tax elusion, I proceed this way.

I assume foul play in both cases (local business and credit card provider).

  • if VAT in the country I visit is higher than the corporate tax in my country, where my credit card provider is fiscally based, I pay with the credit card (VAT paid, corporate tax on credit card not, tax money will sooner or later enter into the economy of a country not having anything to do with visited or home conutry)
  • if VAT in the country I visit is lower than the corporate tax in my country, where my credit card provider is fiscally based, I pay cash ((VAT not paid, corporate tax on credit card not, additionally money spent in the visited country stay there in cash and sooner or later will enter the official economy)
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    This seems very arbitrary and I'm not sure how it's useful to other travelers
    – ajd
    Commented Oct 21, 2021 at 11:47
  • @ajd thanks for your input. Do you have a better approach?
    – EarlGrey
    Commented Oct 21, 2021 at 12:24
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    Do not travel to countries where many sellers are not paying their taxes. That is a much surer way not to give money to people who do not pay what they are due. (But also look at the sellers in your own country, they might be dishonest as well.)
    – Willeke
    Commented Oct 21, 2021 at 17:00

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