Starting from October last year, every VAT payer is obligated to pay VAT for its business partner in the case he fails to meet his tax obligation. In connection to this, the Financial Directorate has introduced so-called Blacklist of companies and business people with outstanding VAT bills, ensuring you the possibility to verify the credibility of your potential business partner. At the beginning it was not possible to ask for removal from the list once the company had been published on the blacklist. However, the planned Amendment to Tax Code effective from January 2014 introduces the conditions when it is possible to be removed from the list.
The tax payer can be deleted from so-called blacklist by the Financial Directorate if:
- the reason for that the company was included in the blacklist ceased to exist
- and simultaneously if during the next 12 calendar months the company did not fail to meet its obligations in a tax audit, submit a tax return, settle his own tax
- liability and the company could be reached at the address of its registered office, place of the business or at the address of its business establishment.
- or if registration for VAT has been cancelled
Peter Pašek, Managing Director Accace Slovakia, considers as the main benefit that there is a centralized register where purchasers can verify whether their business partner performs obligations provided by law due to checking the risk of the application of the concept of tax guarantee by the financial authority with respect to them as purchasers. “If the relevant supplier is in the specified register, usually it leads to pressure by purchasers in the matter of verifying whether the VAT applied to them was actually declared and paid, i.e. the state transferred a part of its obligations relating to control to the taxpayers as such”, stated Pašek.
However, as the main problem can be seen when conducting tax audits on purchasers is that tax offices do not work with the relevant register when checking the entitlement to apply VAT deduction. However, the introduction of electronic filling of so-called check reports effective starting from January 2014 could solve this problem, if the financial administration system is set up properly. “It means if the financial authority‘s information system highlights taxpayers who deducted the VAT compared to entities being in the relevant register which do not report the relevant transaction in the check report, or which failed to pay the relevant tax, then the introduction of check reports can help in practical application of this concept”, stated Pašek.