Recently, Slovak law has introduced new administrative requirements for so-called "selected" taxpayers (vybrané daňové subjekty). This group includes:
* Slovak banks and Slovak branches of foreign banks;
* Slovak insurance companies and Slovak branches of foreign insurance companies;
* Slovak reinsurance companies and Slovak branches of foreign reinsurance companies; and
* other taxpayers with their head office in Bratislava or in Malacky, Pezinok or Senec districts and with an annual turnover above Sk1 billion; even if the taxpayers' turnover in subsequent years does not reach Sk1 billion, they officially remain "selected" taxpayers for a further two years. In addition, if the taxpayer's turnover reaches Sk1 billion in 2000, but not in 2001 and 2002, the firm will cease to be a "selected" taxpayer on January 1, 2004.
To administer the tax issues (including tax audits) of "selected" taxpayers, a special tax authority (Daňový úrad pre vybrané daňové subjekty) has been established. Considering the wealth of the "selected" taxpayers, it is probable that they will be subject to more detailed and frequent audits than other taxpayers.
According to the Slovak Tax Collection Law, the special tax authority should take over all documentation related to the "selected" taxpayers by April 30, 2002 and start administering their tax issues on May 1, 2002.
Furthermore, the Tax Collection Law has been amended with respect to the state treasury (štátna pokladnica) system. Under the amendment, "selected" taxpayers are obliged to submit estimations of their tax liabilities. This rule applies in 2003 for the first time.
These estimations should be submitted in a prescribed form, which is not known yet. Upon approval by the tax authorities, the prescribed estimations can also be submitted via email or in electronic form, as long as the hard copy is submitted in paper form within five working days thereafter. If taxpayers do not submit estimations, the tax authorities can penalize them up to Sk1 million.
The law does not specify the taxes for which the estimations have to be made. However, it can be presumed that the taxpayers should prepare estimations of all taxes for which they are liable.
The taxpayers are obliged to submit the estimations by the end of the year, i.e. by December 31, 2003, for the first time. The law does not clearly state for which tax period the estimations should be made. However, considering how the state treasury system should work, it can be presumed that the estimations should be made for a calendar year.
If the tax period is shorter that one year, an estimation for the next 3 tax periods together with the tax return is required to be submitted within the period set by law. This rule first applies in 2003 and should relate mainly to VAT and Excise Duty Taxes.
In my opinion, the idea of establishing a state treasury is great as it allows planning and efficient management of cash inflows and outflows of public bodies. Greater control over public money should also help reduce opportunities for corruption within state institutions. However, bringing the state treasury on-line could lead to practical problems and further administrative requirements for taxpayers.
New Travel Allowances
From July 1, 2002, a new Law on Travel Allowances has been in effect, under which also board members and statutory representatives of Slovak companies and other people who act for Slovak entities based on a written contract can obtain travel allowances. In addition, travel allowances amounts have been increased as of July 1, 2002.
The travel allowances cover, for example, reimbursement of travel expenses, accommodation, per diems and other costs. Providing a business trip takes more than seven days, travel costs incurred to visit family should be reimbursed each week, unless a collective, labour or other agreement states that the reimbursement will be provided for a longer period of up to one month.
If an individual to whom the Law on Travel Allowances applies takes a business trip abroad, he/she is entitled to reimbursement for the cost of health insurance and travel related to visiting his/her family (providing further law provisions are met), per diems, and pocket money in the amount of 5-40 per cent of obligatory per diems.
According to the Slovak Income Tax Act, travel allowances are not taxable for recipients who have income from dependent activities, and are tax deductible for payers, providing further tax law conditions are met. Thus, the new Law on Travel Allowances might provide some new opportunities for tax planning.
Ingrid Jalčová, ACCA, is a chartered accountant with five years of experience with global advisory firms. She invites comments and questions at email: email@example.com
Tax Corner is a bi-weekly column that will appear this summer. The next instalment will be on stands on July 15, Vol 8. No 27.