Amendments to GFD’s information effective from January
The General Financial Directorate (GFD) announced that the existing approach to the waiver of penalties for the failure to file VAT ledger statements will also be applied in 2018 and that the unreliable payer concept criteria will be extended effective from 1 January 2018.
On 2 January 2018, the GFD published an update of Instruction D-29, regulating the waiver of penalties for the failure to file a VAT ledger statement. As in the previous year, taxpayers will again be allowed to apply for one waiver of a penalty of CZK 10 000, CZK 30 000 or CZK 50 000. The same applies to the penalty for a late response to the call to file a VAT ledger statement or the penalty for a late response to the call to change, amend or confirm data in a VAT ledger statement if the taxpayer responds within five working days of the deadline for responding to a call. In the first case, the waiver is conditional on the taxpayer’s duty not actually having arisen; in the second case, on the taxpayer only confirming the accuracy of the filed VAT ledger statement. The penalty waiver options in 2018 thus remain the same as in 2017.
A less positive piece of news for taxpayers is that the criteria for applying the unreliable VAT payer concept will be extended. Payers whose originally-declared tax on output is increased by the tax administrator by a minimum of CZK 500 000 and who fail to pay the additionally-assessed tax within the additional deadline set in a payment order will be considered unreliable. The new criterion is effective for tax administrator’s decisions issued after 1 January 2018 in connection with proceedings commenced after 1 January 2013.
In its information, the GFD states that the new criterion does not target taxpayers’ unintentional errors or mistakes but will only be applied when it is proven that the taxpayer has acted in an abusive manner or has attempted to elicit an unsubstantiated tax benefit. When assessing the violation of statutory duties, the tax administrators should take into account the person of the taxpayer as such, their experience with dealing with this taxpayer and any objective reasons deserving of special attention that have led to the failure to meet these duties. We have to wait and see how the tax administrators will apply the new criterion in practice.