The new tax system from 2018

Dear Clients! Dear Readers!

From 1 January 2018 the previous Act on Taxation System will be replaced by two new laws. The rules of procedure can also become autonomous, i.e. no longer will they rely on other administrative laws as laws in the background. The Tax Administration Act contains the general procedural rules on taxation, and the new Act on Taxation System organizes the detailed rules relating to the tax procedure.

Tax inspection, a compliance scrutiny, shortening controls

The types of audits remain essentially the old ones but their names have been changed: the audit of a closed audited period is called tax inspection, whereas the other scrutiny (for instance the audit of some previous tax liability, the scrutiny of the authenticity of certain economic events) is called compliance scrutiny in the law.

One of the most significant innovations is that an objective deadline for the audit is included in the bill. Accordingly the period of the tax inspection may not exceed 365 days, and 180 days in case of reliable taxpayers and VAT registered taxpayers.

Increasing focus on inspection - no new post-audit evidence will be acceptable

The deadline for the submission of comments relating to the minutes will rise from the current 15 to 30 days in case of a tax audit of a closed period, but it will be forfeiture of legal rights in case of every audit. So non-compliance with the deadline will not make it possible to rely on exemption.

A significant change is that after 1 January 2018 (i.e. after the legislation becomes effective) in the appeals submitted to the tax authority - apart from the grounds of nullity - it will not be possible to put forward a new fact or refer to new evidence which the company had been aware of before the tax authority made the decision, but it was not put forward. Therefore it is very important that businesses act prudently before making their comments on the minutes to be submitted, and disclose all relevant facts and evidence against the tax authority's arguments. If they fail, in their appeals to be submitted after 1 January 2018 no new evidence can be put forward and no new evidence can be referred to.

This also applies to audits in progress!

It is therefore particularly recommended to involve a tax consultant in the procedure already in the control phase because later there might only be limited liability to change a possibly unfavourable decision.

In joint thinking and argumentation our staff will always be available in the future.

Best regards:

ABT Treuhand group