Amendment significantly expands reporting duties towards tax authority
In mid-February, the Ministry of Finance submitted an amendment to the Tax Procedure Rules for an accelerated comment procedure. This amendment should ensure access to other information about taxable entities and their bank accounts to tax and other state authorities, responding to a recent decision on the scope of banks’ reporting duties.
It is clear from the ministry’s explanatory report that it does not agree with the Supreme Administrative Court’s restriction of the scope of information provided by banks and other similar institutions to information explicitly specified in the Tax Procedure Rules. Under the new amendment, information that upon request will have to be submitted to the tax authority will also include information about persons authorised to dispose of cash at the bank, persons who deposited cash to an account and about payment recipients. It will also include information about remote access services attached to a bank account, including specifics of the remote access equipment, and information about safe deposit boxes.
Referring to the EU Directive on Administrative Cooperation (DAC 5), the ministry proposes to extend the catalogue of information submitted by liable persons under the Act on Some Measures against Legalisation of Proceeds from Criminal Activity and Financing of Terrorism (the Anti-Money Laundering Act). In accordance with the new amendment, the tax authority will be able to request from various entities all information obtained during the identification and inspection of clients under the act, including related written materials and information about the collection method of such information. Currently, only the Financial Intelligence Authority (since 2017, the successor to the Ministry of Finance’s financial intelligence department) has this information at its disposal. The amendment should primarily affect professions where confidentiality is protected by special regulations. In addition to banks and other financial institutions, this mainly involves notaries, attorneys-at-law, bailiffs, tax advisors as well as real estate brokers and used car dealers. The ministry’s proposal caused much outrage among professional chambers, asserting a conflict with their pledge of confidentiality.