TMF Group Croatia Amendments of the General Tax Act are now in force

Transcription

1 TMF Group Croatia Amendments of the General Tax Act are now in force

2 The General Tax Act amendments came into effect on 17 March Please find below the most important changes: The definition of a tax secret has been made wider and more specific so that now the definition from Article 8 of the GTA includes the information that is exchanged, not only based on a double tax treaty, but also via other international agreements and exchanges in accordance with the regulations and the directives on administrative cooperation and mutual assistance between European Union member states as well as the directives on interest on savings in force in the European Union and all future amendments to these acts. The Act prescribes the authority of the tax bodies to bring binding opinions on the tax treatment of future and intended transactions, i.e. business events and taxpayers activities and the authority of the Minster of Finance to prescribe, by an Ordinance, the application area, manner, timeframe and cost of the issuance of biding opinions. The institute of biding opinion is one of the ways of applying and achieving the principle of acting bona fides. The Act prescribes that the actions related with establishing and collecting tax and the application of the double tax treaties are performed by the Ministry of Finance of the Republic of Croatia via the administrative organizations in its system (Tax office and Customs Office) and via the organizational units of the Ministry of Finance responsible for the collection, control, analytical processing and exchange of information relevant for taxation (Independent sector for tax fraud discoveries which was established by the Regulations on amendments of the Regulations on internal organizations of the Ministry of Finance, published in the Official Gazette no. 134/2014) in procedures of which the provisions of the General Tax Act are applied appropriately. The Act prescribes that, upon a special request from the Ministry of Finance, the banks have the obligation to deliver the information on the transactions of all domestic and foreign currency accounts of certain persons (legal persons, natural persons performing the registered activity of sole crafts, free professions and citizens), except the transaction information of checking accounts and savings deposits, within other timeframes except those already prescribed by the GTA monthly or trimonthly and cumulatively for the period from January 1 st to the last day of the reporting period and they have the obligation to also deliver transaction information of all other accounts. The GTA prescribes that the tax acts which decide on individual rights and obligations of the tax debt relationship can be submitted electronically with the explicit consent from a party. This provision was amended in such a way that the tax acts can be delivered upon the request of a party. It prescribes that from January 1 st 2016 the personal delivery to companies can be done electronically without the request or explicit consent of the party with the purpose of conducting a more efficient and less costly tax procedure. Furthermore, changes regarding taxpayer s rights on tax report correction have been also introduced. 1

3 In this way the correction of a report can be performed upon the invitation of the tax body within the timeframe determined by the tax body while the conditions, way and timeframe of the application of the tax report correction shall be prescribed by an Ordinance by the Minister of Finance. More specifically, when there are irregularities established in the course of the tax procedure, made by a single taxpayer or a larger number of taxpayers, the same would be invited by the tax body to submit within the determined timeframe a tax report correction, everything with the purpose of voluntary fulfilment of tax obligation. If the taxpayer does not submit within the given timeframe a correction of the report, the procedure of tax inspection would be initiated. The changes also allow for the possibility of report correction due to the application of European Union regulations, no longer than statute of limitations as prescribed by the provisions of the European Union regulations. For example, the Council Regulation 904/2010 Articles 18 and 19 allow for the deadline of 5 years for the correction of information in the VIES database and this Regulation has a direct application. The Act introduces the obligation of correction of the report within 15 days from the enforceability date, that is, from the finality of a resolution in the cases where the correction of the report should be done after the enforceability of the resolution on inspection or the finality of a court resolution (e.g. a decision cancelling the decision pursuant to which the taxpayer had to pay unpaid salaries to the employee and the corresponding taxes and contributions) or the decision by other bodies (e.g. the decision of the Ministry which decided that the taxpayer did not have the obligation to pay a certain tax) which was brought after the regular timeframe for the correction of the report was brought. It was prescribed that the Minister of Finance shall prescribe by an Ordinance the obligation of submitting the statistical reports to the Tax Office for the purpose of establishing the facts necessary for taxation. These changes and amendments make the GTA provisions compliant with the provisions of the Administrative Procedure Act. The tax body and the taxpayer can conclude an administrative agreement in order to settle the matured tax debt. The administrative agreement can refer to the settlement of the whole or partial tax debt and it is concluded in writing for no longer than 24 months. The administrative agreement is concluded by the free will of the participants of the tax debt relationship, and it may not be contrary to compulsive regulations or public interest, it may not be concluded at the expense of third parties nor can it be contrary to the statement of the resolution which determined the tax obligation. The administrative agreement may not be concluded with the taxpayer whose account was blocked by other creditors and against whom a procedure of establishing the misuse of rights in the tax debt relationship is being conducted, for the tax debt that was already the subject of a terminated administrative agreement, for the debt for which an administrative agreement is concluded or for the debt which is included in reprograming. The administrative agreement shall not be concluded if the tax body estimates that the taxpayer has not made likely the fulfilment of the purpose and subject of the administrative agreement. In the case of a failure to comply with the provisions of the administrative agreement, the tax body shall unilaterally terminate the administrative agreement by a resolution against which an administrative dispute can be initiated, and the collection of the obligation from the administrative agreement shall continue pursuant to the provisions of the GTA and the Bankruptcy Act. 2

4 It also prescribes the ability to make a tax settlement between the tax body and the taxpayer for newly established obligations in the procedure of tax inspection until the record on performed tax inspection is delivered. The tax settlement may not be concluded if during the tax inspection there is a reasonable suspicion of committing a criminal offense. The purpose of making a tax settlement is to increase the collection of newly established obligations in the tax inspection, to shorten the duration of the tax inspection (no objections, appeals, lawsuits), to encourage taxpayers to make voluntary payments of tax obligations via simulative measures which refer to the tax obligations determined by the tax basis estimate, to decrease the calculated late interest if the taxpayer accepts the obligations established in the inspection and waives the right to appeal and pays the newly established obligations during the inspection, and the tax body waives the misdemeanour prosecution if in accordance with the Misdemeanour Act there exist the conditions for the application of the opportunity principle and if the taxpayer pays the newly established obligations during the inspection. In this way, the number of proceedings before the second instance body and the courts would be reduced, and there would be a decrease in the risks for both sides considering the length of the procedure and considering the possible tax collections which in the moment of execution significantly impair the taxpayer s liquidity. Exceptionally, the taxpayer to whom in the procedure of tax inspection a record on performed tax inspection was delivered before this Act entered into force, or whose obligation was established by a resolution which was not executed, can submit, within six months from the day the Act entered into force, a proposition to the competent tax body in order to conclude a tax settlement for the obligation established by this resolution. For claims from tax resolutions where the amount is not higher than 5.000,00 HRK, the tax body which in the first instance brought the executive resolution shall submit, if the taxpayer does not pay the indicated amount within the timeframe indicated in the resolution that established the obligation, to the body responsible for enforcement a payment order to the taxpayer s funds in accordance with the special Act. This provision makes the GTA compliant with the Act on Enforcement of Financial Assets. The Act prescribes a fine for the legal person, responsible person within the legal person and for the natural person craftsman and natural person which performs other independent activity and natural person if they fail to submit the statistical reports for the purpose of establishing the facts necessary for taxation to the Tax Office. The Act prescribes a fine for a natural person who shows inaccurate or false information in the tax report, who fails to respond to a call of the tax authority with the purpose of providing verbal notification at the official premises of the tax body and who upon the request of the tax body fails to deliver a notification in writing or fails to do so in a timely manner. Furthermore, Article 210 paragraph 1 of the GTA prescribes that the tax body can by a resolution forbid the taxpayer further work if he refuses to participate in the tax procedure, if he fails to respond to the call of the tax body and if he does not allow the procedure of tax inspection. The mentioned provision was amended and it prescribes the possibility of prohibiting further work to the taxpayer if he fails to issue invoices, fails to show goods and services deliveries via POS equipment or a different appropriate way while they are collected in cash or fails to keep the business books and records with the purpose of taxation in accordance with the legal regulations. 3

5 This Act introduces new institutions such as the issuance of binding opinions, the possibility of concluding a tax settlement and administrative agreement. It also prescribes the obligation of submitting the statistical reports to the Tax Office with the purpose of establishing the facts necessary for taxation, the possibility and the duty of tax report correction, electronic personal delivery, all for the purpose of a more efficient and economical tax procedure, encouraging taxpayers to voluntary payments of tax obligations via simulative measures which would decrease the risks both for the tax body and the taxpayer considering the length of procedure duration and considering the possible tax collections which in the moment of execution significantly impair the taxpayer s liquidity. 4