BRATISLAVA, May 4, (WEBNOVINY) — The Cabinet seeks ways to reduce the space for tax evasion in the segment of excise and value-added tax (VAT) as well as for evasion in payment of payroll levies and income taxes as it approved proposals of three concepts tailored by the Finance Ministry to eliminate tax fraud at its regular session Wednesday. At the same time, the government of Iveta Radicova ordered the ministry to prepare particular legislative changes by the end of November or December of this year.
“All these materials arise from the government’s program statement, in which the government pledged to reduce tax evasion and fraud and thus increase not only revenue to the state and public budgets but also improve the business environment and do it as an instrument of fighting crime too,” said Finance Minister Ivan Miklos after the Cabinet session.
One of the areas of the ministry’s focus is for example excise taxes, which form an important and relatively stable part of state budget revenue. Last year’s revenue from these taxes was more than EUR 1.9 billion. However, according to the Finance Ministry, practice shows it is necessary to improve current state so that illegal activities of entrepreneurs are eliminated. One of ministry’s proposals is, for example, to change cigarette and alcohol tax packaging stamps. The changes should concern printing and issuance of tax stamps or improvement of their security features.
Moreover, establishment of a special audit department should help curb the space for tax evasions by revealing tax fraud which occurs due to the imperfections in the existing legislation regulating tax and payroll levies. Prepared unification of collection of taxes, duties and insurance fund contributions via the project UNITAS should also improve the current state.
The Finance Ministry also plans to minimize the space for fraud by electronization of the public administration. They want to connect the information databases of tax authorities with databases of individual bodies of the public administration, Business Register, Statistics Office, health insurers, banks and social security agency Socialna Poistovna.
Experts greeted the measures prepared by the Finance Ministry limiting room for tax evasion. Nevertheless, they pointed to potential negative consequences these measures might have on the business sphere. As one of the measures to curb VAT fraud, the department suggests to extend the content of application forms for VAT registration by information that might indicate the risk rate on the side of the applicant; for instance. Also, a register of persons should be prepared who were informed by the tax administration that they have been identified as individuals participating in suspicious commercial activities. Moreover, VAT security deposit might be introduced for entities which are deemed likely that recovery and payment of tax might be unsuccessful.
SITA