Benefits and drawbacks of the 2020 amendment to the Czech General Fiscal Code

What’s new in the amendment to the Czech General Fiscal Code? More straightforward review procedures, lower default interest, electronic communication with the taxman, among others.

The bill for an amendment of the General Fiscal Code, sponsored by the finance ministry, has reached the stage of second reading in the Chamber of Deputies. In what follows, we take a look at some of the more substantial changes:

Improved communication with the financial authorities – the finance office goes online

The amendment bill anticipates the launch of an online portal, titled „MOJE daně“ (My Taxes), which essentially represents an expansion on the existing infobox on taxes and is designed to foster active communication with the tax administration. The portal promotes the filing of tax returns via online forms, which will be partly pre-filled with data (available to the finance office from previous tax procedures). The finance administration will also use the portal to communicate with tax subjects.

Less stringent penalties

Tax subjects will welcome the planned 6% cut in default interest on outstanding tax debts (from the current 14% p.a. above the repo rate of the Czech National Bank as at the first day of the calendar quarter) down to 8% p.a. above the repo rate of the ČNB as at the first day of the quarter. This will go hand in hand with halving the interest rates on deferred payments.

Removal of the five-day grace period for late filing

Less positive for taxpayers is the abolition of the existing grace period for filing a tax return, thanks to which tax returns may be filed, or tax debt may be paid, „a little later“. Specifically, tax subjects today won’t have to pay any penalties if they file late (by up to five working days) or pay late (by up to four working days). This tolerated tardiness is being used e.g. by tax subjects who discharge their tax duties from foreign bank accounts, becausetransfer of monies from abroad takes longer than in the case of a domestic transfer.

New deadline for electronic filing of income tax returns

The plan is that those who file their income tax return online should be given an extra month to do so.

Advances on claims for input tax surpluses

A supposedly positive change concerns input tax surpluses which in the future may be released to the taxpayer in the form of an advance payment. Specifically, the amendment anticipates that the financial authority will be obliged ex officio to release that portion of the input tax surplus which is not subject to review. Having thus introduced advance payments on claims for input tax refunds, however, the amendment bill however goes on to extend the statutory deadline for making the refund itself to 45 days, ostensibly so as to give the finance office sufficient time to conduct its review. Needless to say, this change is ultimately to the disadvantage of the taxpayer: compared to the situation today, payouts of input tax deduction will be delayed by 15 days.

A quick note on the new concept for tax audits

Going forward, initiation of a tax review by the authorities will no longer require that the tax subject be physically present (personal action). Service of a notice informing them of the commencement of a tax audit will be sufficient. This is driven by an attempt to simplify the procedure for initiating tax audits so as to speed up the overall process.

The amendment to the General Fiscal Code is set to come into force as of 1 May or 1 June 2020.

Parliamentary Press 580/0, on the amendment of Act No. 280/2009 Coll., the General Fiscal Code, as amended, and of certain related laws



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