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Communicating online with the taxman

‘ELECTRONISATION’, a Slovak neologism meaning the switch from paper-based operations to a digital environment, has become a mantra in Slovakia, promising to make the life of ordinary citizens, businesspeople and the state administration better and easier. But the current reality in Slovakia has instead tended to support the saying that while a man can really complicate a situation, he can never do it as well as a computer.

‘ELECTRONISATION’, a Slovak neologism meaning the switch from paper-based operations to a digital environment, has become a mantra in Slovakia, promising to make the life of ordinary citizens, businesspeople and the state administration better and easier. But the current reality in Slovakia has instead tended to support the saying that while a man can really complicate a situation, he can never do it as well as a computer.

The current problems accompanying the launch of the new information system at the Financial Administration, which has already cost its head Igor Krnáč his job, have given tax IT a bad name. The current problems occurred during the launch of new software for the country’s tax administration system, within the Financial Administration, which combined the tax and customs authorities at the beginning of 2012 as part of the UNITAS project. Nevertheless, experts still maintain that electronisation could result in positive change.

Earlier this year the Financial Administration launched its so-called electronic identifier, designed to facilitate free, comprehensive electronic communication. The identifier enables taxpayers to communicate with the tax office electronically without the need to purchase a guaranteed electronic signature.

Up to February 13 the Financial Administration registered applications for about 22,000 electronic identifiers. As Gabriela Dianová, spokesperson of the Financial Administration, told The Slovak Spectator, it is not possible to assess the interest of individual taxpayer groups so far, as not only business entities but also private individuals can apply for it.

The tax administration overhaul also obliges some tax subjects, for instance VAT payers (as of April 1, 2012), to communicate with the tax administration exclusively by electronic means.

The Financial Administration estimates that the number of tax subjects obliged to communicate electronically will be 218,000. But Dianová stressed that this number already includes holders of guaranteed electronic signatures.

Despite the current problems, experts believe that electronic communication will make taxpayers’ lives easier.

Miloslav Jošt, senior tax consultant at Accace, which provides accounting, payroll and tax advisory services, perceives the preparedness of the tax administration to be the biggest question mark hanging over the change in communication between taxpayers and tax administrators, a point which the administration’s current travails seem to bear out.

“As long as the initial bugs are ironed out, there is a presumption that the new system will make communication more effective and will bring savings in administrative costs to all parties involved,” Jošt told The Slovak Spectator.

According to Jošt, the new form of communication will be faster and, where the free identifier is used, also cheaper for taxpayers.

“We do not expect a significant change in the administrative burden on taxpayers because the amount of administrative duties remains the same, only the way of communication will change,” said Jošt.

The Slovak Chamber of Tax Advisers (SKDP) lists among the advantages of electronic communication the possibility to fill in and later print out tax returns, as well as the facility to send them electronically to tax offices. The chamber states that this computer application not only reduces the administrative burden of taxpayers but also reduces the risk of tax returns being completed incorrectly. In general, this will make communication between taxpayers and tax administrators more effective and reduce mailing costs, the SKDP said. Here the chamber also stressed the possibility to submit tax returns without any time limitations, i.e. also at night. Among potential disadvantages, it points to the need for users to meet some technical conditions such as adequate hardware and software, not to mention computer literacy.

“For most taxpayers this should be not a problem any more, but some small businessmen may have a problem,” Mária Molnárová from the SKDP told The Slovak Spectator.

According to the SKDP, there are two groups of taxpayers using electronic communication: those that are obliged to use electronic means and those that do so voluntarily. There is also another special group of authorised subjects such as tax advisers, who cannot currently electronically submit documents without a guaranteed electronic signature.

“For this group, electronic communication is very important, advantageous and opportunities for its improvement are currently a topic of discussions between SKDP representatives and the Financial Administration,” said Molnárová.

Jošt sees the voluntary option as being of potential benefit to taxpayers who have to communicate with the tax office frequently, for example companies that are not VAT payers but who must deliver monthly overviews and reports.

“For taxpayers who communicate with the tax administrator only once or twice a year it would, in our opinion, be simpler to stick to the current way of communication,” said Jošt.

The main advantages of the indentifier are, according to Jošt, its lower price and the simpler procedure required to obtain it compared to the guaranteed electronic signature.

“But only its usage in real life will show its advantages and disadvantages from the viewpoint of the user,” said Jošt.

Topic: Finances and Advisory


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