Information obligation: what question may tax officers ask?
The tax authorities often call upon taxpayers – both formally and informally – to provide them with information or documents. While the information obligation towards the tax administrator is rather extensive, it does have its limits. Sometimes, such call may be a harbinger of a tax inspection focusing on a particular supplier. In this article, we clarify what questions the tax officers may ask regarding your business partners and in what manner, what to watch out for, and how to defend yourselves.
The Tax Procedure Code stipulates the information obligation: upon request, selected persons are obliged to provide the tax administrator with the requested data. That obligation applies to persons effecting supplies that are subject to any tax; the obligation thus falls upon virtually all business entities. To those who are bound by confidentiality – typically banks, insurance companies or lawyers and tax advisors - special rules apply that to some extent lift their confidentiality duty.
Taxpayers are obliged to provide the tax administrator only with information leading to the fulfilment of the purpose of tax administration: i.e., to correctly determine and assess tax, and ensure its payment. Tax administrators also may not ask for information that they can ascertain from their own records or from another public authority. Most often, tax officers ask for detailed information about trading with another taxpayer, and request invoices or contractual documentation. The tax administrator's call (request) must be formal, usually delivered to the data box, and must be justified – the tax administrator must explain why the requested information is needed. If the tax administrator contacts the taxpayer by phone or email, there are no sanctions if the taxpayer does not respond. If the call meets the statutory conditions, the taxpayer must provide the requested information to the tax administrator, free of charge and within the set deadline, but only if the information is at their disposal. The taxpayer is under no obligation to obtain additional information for the tax administrator or to process or assess the information in any way. If the taxpayer does not comply with the call and does not respond at all, they face a penalty of up to CZK 500,000. The deadline set in the call is usually 15 days, and it is possible to apply for its extension. The call/request for information itself cannot be appealed, but it is possible to lodge a complaint as a form of defence; an appeal is only possible against the decision that imposes a fine.
In practice, a call to provide information may be a harbinger of a further review or an upcoming tax inspection. This is quite common, especially when the tax administrator asks about cooperation with entities that turn out to be uncontactable for the tax administrator. Recently, it has been mainly the case of suppliers of advertising services, cleaning work, or various unqualified assembly work. The tax administrator may also use the data obtained by means of the call in a subsequent tax inspection.