VAT Control Statement - What are the Implications of the New Statement
A New VAT Control Statement.
From the January 1 2014 the Slovak tax authority has yet another tool to help curb the unauthorized excessive tax deductions called the VAT control statement. The submission of the statement is mandatory for every VAT tax payer.
Thus, the tax authority will keep track of all issued and received records that will change the targeted area controls and at the same time renders them more effective. In a nutshell, the statement is an automatic processing of data and their subsequent cross-checking.
The control statement should help uncover any carousel fraud, deceitful invoices, issuing of fictitious invoices, non-issuance of invoices, or expose multiple tax deductions set against a single invoice.
Good news for the entrepreneurs:
The introduction of the VAT control statement is setting stage for the future tax system, where the tax payers shall not be obliged to submit their VAT returns, instead the tax authority will do this for them.
- the first VAT control statement should be submitted by the monthly VAT payers until 25 February 2014, quarterly tax payers have until 25 April 2014 to submit the statement,
- VAT control statement will be included in the tax return,
- in the electronic form one will list the details of all received and issued invoices. In the case of cash-register receipts, issued to customers, one will only submit a single number (the total amount of sales) for the period.
Through their website the businessmen will submit these statements. (The submission system for the new VAT control statement will be part of the new tax authority portal, which is already being implemented).
More information about the VAT control statement
When and whom submits the VAT control statement?
According to the § 78a of Act no. 222/2004 Coll, the value added tax, as amended, the submission of the VAT control statement is mandatory for each VAT tax payer for each tax period for which the taxpayer is required to file a tax return, within 25 days after the end of the tax period.
VAT control statement is not required to file, if the entity:
- is not required to file a tax return,
- is not required to fill in any data on transactions in the tax return,
- is required to fill in the data on transactions in the tax return but these transactions are intra-community supply of goods to another EU country, the delivery of goods within the triangular trade and the exports of goods)
More detailed information can be found in the guidance.
If the financial authority finds out during the tax control that the entrepreneur did submit the VAT control statement or the statement contains incomplete or incorrect information, the authority will ask the entrepreneur to amend the statement. The entrepreneur will have 5 days to answer.
However, errors might be severely punished. The amendment foresees a penalty up to 10 thousand EUR in case of non-submission, or worse, if the statement is submitted after the deadline, or the statement will include inconsistencies.
If it is a repeated offense, the penalty could total up to 100 thousand EUR.
According to the representatives of the Ministry of Finance, this legislation is directed at the identification and prevention of crime. Small inconsistencies in the statement will be tolerated and should not be punished, but there is no guarantee that the above will actually happen.
Since the form is relatively complicated, representatives of the tax authority promise that companies will not be fined for the first three months in case of errors in completing the VAT control statement. Also, they added that such cases may impose a fine of no more than 5 EUR, which, paradoxically, under the current rules is not required to be payed.
Imrecze Francis, president of the Slovak tax authority, in an interview for the HN confirmed that the tax authorities do not want to penalize companies for unpreparedness for filling the VAT control statement if it does not affect the detection of fraud in VAT.
He added, however, that if the tax subject after three months does not file the statement correctly, it will be no longer considered a repetitive error, in which case the subject faces the maximum fine.
Sources: Pravda, HN, ministry of finance.