Czech Republic: Finance ministry proposes an amendment which puts an end to the option to file VAT returns via databox
The finance ministry has presented the government with a bill that would amend certain laws in connection with the passage of the „Act on Sales Records“ (i.e., an Act stipulating the rules by which businesses have to keep detailed accounts of their sales revenues). As a part of these changes, the option to file VAT returns via databox would be abolished. „Databoxes“ have been established by the ministry of the interior for all legal entities, and the latter are entitled to engage in legal transactions with the public authorities exclusively via databox. In this sense, the amendment, if it were to be written into law, would create an exceptional precedent for the filing of VAT returns.
Numerous parties have spoken out against the amendment (or, as it were, against killing the option to file VAT returns via databox): the Chamber of Commerce, the Chamber of Tax Advisors, or the Association of Industry and Transport in the Czech Republic. In fact, even the ministry of the interior – which is the sponsor of the databox system – is taking a stand against the amendment. In the explanatory memorandum for the bill, the ministry of finance has cited the small volume of acceptable files of 10 MB, the inferior protection for sent data, and the need to lighten the administrative burden on taxpayers and on the financial administration.
However, the ministry of the interior, as well as Česká pošta (Czech Post) in its capacity as the service administrator, have both called into question the validity of the argument that the databoxes’ capacity was too low. This is because the size of the databox is merely a matter of setting the proper limit, which may be up to 50 MB. But also the other arguments raised in the explanatory memorandum, such as greater protection or less red tape on the part of the taxpayers, are considered highly debatable by the experts.
If the amendment were to become law in spite of these reservations, then all VAT returns would have to be submitted via the tax portal of the finance administration as of 1 January 2016. One of the portal’s features is that it recognizes inadmissible mistakes in advance and thus prevents faulty filings before they happen; in the opinion of the finance ministry, these faulty filings therefore never become the subject matter of subsequent official notices by the finance office. For registered VAT payers, the amendment means that they have to obtain an electronic signature for themselves, because all filings via the portal of the finance administration must be furnished with such a signature.
Source: Bill for the amendment of certain laws in connection with the passage of the Act on Sales Records, ref. No. MF-16086/2015/32-8, and explanatory memorandum; Decree No. 194/2009 Coll., stipulating the details concerning the use and operation of the databox IS; VAT Act (Act No. 235/2004 Coll.); Act No. 300/2008 Coll., on electronic transactions and authorized conversions