We would like to inform you that the amendment to the Tax Administrative Code was approved in September 2015 by the National Council of the Slovak Republic. The main aim of the amendment is to encourage entrepreneurs to fulfill their tax obligations in more proper and timely manner. Read the overview of the most important changes that come into force on January 1,2016.
Introduction of so-called time aspect by imposing penalties
The main reason for the amendment to the Tax Administration Code in Slovakia is introduction of so-called time aspect by imposing fines.
Under the new wording, following measures will be effective: if tax administrator imposes tax or tax difference based on the results of tax audit, he/she will impose the fine calculated by annual rate 10% (taking into consideration the current interest rate level of the ECB) from the supplementary assessed tax for every day after the original due date of the tax.
In order to encourage taxpayers to submit supplementary tax return as soon as possible – even after the tax audit has been announced – fines will be calculated by more favourable tax rate in case of submission of supplementary tax return:
- in the amount of 3% p.a. when filing supplementary tax return before receipt of the notice on initiation of tax audit
- in the amount of 7% p.a. when filing supplementary tax return within 15 days after receipt of the notice on initiation of tax audit.
The fine will be imposed at least in the amount of 1% from the supplementary assessed tax and at the same time it cannot be higher than the supplementary assessed tax. The later supplementary assessed tax will be specified, the higher will be the fine.
One aggregate fine for breach of more tax obligations
As of January 1, .2016 also so-called principle of absorption will be introduced, i.e. in event of breach of several administrative offences by one person, for that a fine is determined in range, only one fine will be imposed.
To be able to apply the principle, the person has to breach several administrative offences within one act while the same tax administrator is entitled to impose the fine. The tax administrator will be entitled to impose the total fine only if it will be possible and purposeful.
The principle of absorption can be applied not only by administrative offences regulated by tax code, but also while imposing fines for administrative offences regulated by special acts as for instance Income Tax Act, VAT Act etc.
If a taxpayer commits one administrative offense under the Act on Accounting and one under the Income Tax Act, the total fine cannot be imposed. However, if the taxpayer breaches more provisions under the same act, as for example under the Act on cash registers use (he/she does not use cash register to record transactions and does not give buyer the receipt from the cash register), one total fine can be imposed for both offences under the statutory provision related to the administrative offence with the highest rate of fine.
Possibility to file an amended tax return also after commencement of tax audit
Under the new wording, taxpayers will be allowed to file a supplementary tax return event after the commencement of tax audit, and this within 15 days after the drawing up the meeting minutes on commencement of tax audit, receipt of the notice of the commencement of tax audit, receipt of the notice on extension of the tax audit to other tax period and on extension of the tax audit to other tax. There is not this possibility nowadays.
Such filing will be “rewarded” by more favourable fine that will be (by taking into account the current rate of ECB) in the amount of 7% p.a. – in comparison to 10% p.a. that would be imposed by tax office based on results of the tax audit.
New regulations for the so-called black list
Also changes related to the disclosure of tax debtors will be a part of the amendment. These provisions will be effective as of May 1, 2016.
The list of tax debtors published on the website of Financial Directorate of the Slovak Republic will be updated on monthly basis while only taxpayers will be disclosed whose total amount of tax arrears exceeds 170 EUR.
At the moment, the list is updated only on yearly basis and only individuals with tax arrears higher than 17 000 EUR and business entities with tax arrears higher than 170 000 EUR are published on the list.
Electronic communication with tax authorities
When speaking about amendment we would like to draw your attention also to amended rules on electronic delivery of documents by tax authority towards taxpayers.
The transmission of delivery of documents by electronic means will be done gradually, latest on January 1,2016.