THE IDEA of making the collection and administration of taxes, customs duties and mandatory payroll levies less bureaucratic and more efficient was unveiled during the government of Robert Fico and the current government is continuing to pursue it. The first changes to the system were introduced on January 1 this year as part of the first phase of UNITAS, as the overhaul is known. New Year’s Day saw the establishment of a brand new state body, the Financial Administration of the Slovak Republic, formed from the merger of the existing tax and customs authorities. The government expects the new scheme to be more taxpayer-friendly and more effective from the state’s point of view.
“The aim is to create a new, more effective, better-working system to organise and manage collection of state revenue,” said Finance Minister Ivan Mikloš in late December, as he introduced the changes within the first phase of UNITAS.
Under these, the number of regular tax offices has been reduced to eight, each based in Slovakia’s eight regional centres, plus one specialised tax office to serve selected taxpayers. The previous network of tax offices has been more or less replaced by a network of tax office branches and contact points. The government has promised that the reorganisation will not have any negative impact on taxpayers’ access to services. On the contrary, it claims that the new scheme is more client-friendly, with longer opening hours – 9:00 to 17:00 Monday to Thursday and 9:00 to 14:00 on Fridays – along with new client zones. The latter should allow taxpayers to settle all their tax-related issues in one place. The zones have been designed in a similar way to their counterparts in commercial banks, so that taxpayers have to interact with as few tax office employees as possible and can thus settle their affairs quickly.
“The optimisation of the network of tax offices is one of the steps in the reform that is focused on raising [offices’] effectiveness as well as the level of services provided to taxpayers,” Ivana Vilčeková, from the tax administration, told the Hospodárske Noviny daily.
The government hopes that these changes will make collection of taxes more effective and prevent tax evasion, especially in indirect taxes like value added tax (VAT) and excise duties. Experts estimate that tax evasion in Slovakia accounts for as much as one third of tax due, according to Hospodárske Noviny.
Another part of the reform of the tax and customs administration is the introduction of new unique identification numbers that will serve as a personal account number that a taxpayer will use. When paying tax, the differing prefix of the account will be used to distinguish individual types of taxes. The Tax Directorate announced these changes in the payment of taxes for about one million taxpayers during December.
The tax administration has also prepared a new, free, comprehensive form of electronic communication which will remove the need for paper records. This enables taxpayers to communicate with the tax administration electronically via a new application, the so-called unique identifier, which removes the need to purchase a guaranteed electronic signature.
The reform also obliges some taxpayers to communicate with the tax administration exclusively by electronic means. However, in late December parliament postponed the obligation for VAT payers to communicate exclusively by electronic means from January 1 to April 1, 2012.
Financial Administration
Following the reorganisation, the Financial Administration now comprises the Financial Directorate, tax offices, customs offices, the Criminal Office of the Financial Administration, and the Competence Centre of Financial Operations. Minister Mikloš stressed that the transformation of the tax offices is mostly an internal reform of the tax administration.
Igor Krnáč, the previous director-general of the Tax Directorate, has been appointed president of the Financial Administration, and remains director-general of the tax section.
Mária Machová, the previous director-general of the Customs Directorate will now serve as director-general of the customs section.
As part of the reorganisation of tax and customs offices, over 1,000 employees are being made redundant: 309 employees were due to be dismissed by the tax administration as of January 1, 2012, according to Krnáč. The redundancies represent a 5.6-percent cut in the number of tax administration employees. The number of managerial positions was reduced from 400 to 250. A major reduction was also planned for the customs bodies, with 779 people (14 percent) set to be dismissed.
Minister Mikloš said that judging by the experience of a reduction in the workforce at the Finance Ministry a few years ago, such people are typically highly qualified and few of them will experience problems finding new jobs.
For now the government has not forecast any specific financial benefits expected to arise from the reform process; Krnáč has stated that the first numbers will be available after two years.
“It is very difficult to calculate the whole impact of the reforms given that we are only starting as of January 1,” said Krnáč in introducing the changes.
The reform of the tax and customs administration will continue with a second phase in 2013, which should see collection of taxes, customs and mandatory payroll levies united in a single system.
