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Finance Ministry proposes strengthened powers to fight VAT fraud

Slovakia’s Finance Ministry has submitted for interdepartmental review ablueprint of a plan to fight VAT frauds, stating that its current efforts and tools to eliminate tax fraud, particularly regarding VAT, are insufficient, the SITA newswire reported. The ministry has tailored a series of measures aimed at efficient elimination of opportunities for fraud and prevention of its further escalation. However, the ministry said its proposed measures do not pose administrative obstructions to business conduct of companies that observe laws.

Slovakia’s Finance Ministry has submitted for interdepartmental review a
blueprint of a plan to fight VAT frauds, stating that its current efforts and tools to eliminate tax fraud, particularly regarding VAT, are insufficient, the SITA newswire reported. The ministry has tailored a series of measures aimed at efficient elimination of opportunities for fraud and prevention of its further escalation. However, the ministry said its proposed measures do not pose administrative obstructions to business conduct of companies that observe laws.

The ministry said its analysis of the impact of the black economy on shortfalls in state revenues from VAT, inspection procedures and the amount of irrecoverable tax arrears has revealed the need for an entire series of measures, starting from the pre-registration processes, different attitude towards selection of entities to undergo inspection, the inspection process itself, to recovery of tax arrears.

The ministry wrote that it is suggesting, among other initiatives, that the content of application forms for VAT registration be broadened to include information that might indicate the risk rate on the side of the applicant; for instance, age, ethnic affiliation, information on employees or intentions to carry out intra-community transactions. Moreover, a VAT security deposit might be introduced for entities for which the recovery and payment of tax might be unsuccessful.

SITA noted that revenues from VAT make up a considerable portion of all state budget revenues. In 2008, VAT revenues stood at €4.62 billion while they dropped to €4.23 billion a year later. The ministry attributed this decline particularly to deteriorated economic conditions as a result of the global economic crisis, shopping tourism in Hungary, Poland and the Czech Republic and efforts of people to reduce their spending, adding however that adoption of some crisis measures also contributed to the shortfall in VAT.

Source: SITA

Compiled by Zuzana Vilikovská from press reports
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