Inspection prior to obtaining a certificate of non-arrears

Service-Tax

In some situations, such as applying for a loan or participating in tenders, the entrepreneur is required to present a tax clearance certificate to the relevant institutions. The tax office has 7 days to issue such a document. In connection with the planned changes to cover the Tax Ordinance, when examining non-arrears with taxes, tax offices will also be required to take into account interest on income tax advances. What does this change mean for taxpayers and tax offices?

No monthly tax returns

Pursuant to the wording of the regulations currently in force, interest on advance income tax is not a tax arrears, nor is it under Art. 51 or art. 52 of the Tax Code. Therefore, when issuing certificates of non-arrears with taxes, the offices do not take them into account. However, the provision on their inclusion was included in the draft amendment to the Tax Code. It seems that such an amendment will have a slight impact on the work of offices or the activity of entrepreneurs. However, as always, it depends on what exactly the government does.

Due to the fact that since 2007, taxpayers have not submitted monthly income tax declarations, both for natural and legal persons, tax offices have lost the ability to monitor whether taxpayers pay tax advances and make them in the correct amount. As a result, the tax office is not able to find out whether a given entrepreneur does not make advance payments for income tax because he does not have to or because he does not want to.

Therefore, it will be difficult to determine what are the motives of the owner of the company and whether he is acting in accordance with the law and whether there is interest on income tax advances at all on his account.

Complicating the procedure

Due to the fact that it is not yet known how the changes are to be introduced (in technical terms), it is difficult to predict their exact impact on the work of tax offices. It may turn out that with each application for a certificate of non-arrears, the tax office will be obliged to initiate a verification procedure or an inspection at the taxpayer's. It seems impossible to reconcile such action with the applicable period of 7 days for issuing a certificate, especially considering that there are many applications for such a document.

According to some experts, advances on income tax and interest on them are to be treated as currently tax arrears are treated, namely - if no assessment decision is issued, they will not be included in the certificates.

The inconvenience for tax offices will depend on how the planned changes are implemented. It should be remembered that in the era of minimizing bureaucracy and the time spent in various types of institutions, ill-thought-out regulations can significantly slow down the procedure of obtaining a certificate, so banal at first glance.

Difficulties for entrepreneurs

Due to the fact that - as mentioned before - entrepreneurs submit an application for a certificate of non-arrears in taxes in specific situations, the complexity of the procedure may significantly hinder the actions taken by business owners. An example may be tenders - difficulties in obtaining such a document, which is often a necessary condition for participation in a tender, may adversely affect the acquisition of public contracts by entrepreneurs.

It is obvious that if the introduced changes involve the initiation of checking or inspection activities at the entrepreneur, applying for a certificate of no tax arrears will take on a new dimension, which will hinder the functioning of the companies. A visit to an entrepreneur's tax office or tax office disrupts everyday activities and requires special preparation.

The question is whether this certificate requires such complicated procedures? Some experts claim that the Ministry of Finance, wishing to make life easier for both entrepreneurs and tax offices, will allow the declaration of the owner of the company to be considered sufficient that he has paid the advances due.

Due to the fact that the draft of the discussed assumptions is currently at the stage of inter-ministerial consultations and social consultations, it is only possible to make assumptions and analyze alternative solutions. Whether and how the changes will be implemented and how it will affect the functioning of taxpayers and tax offices - we still have to wait a while before answering these questions.