Банкеръ Weekly

Briefs

NEW TAXES FOR LAWYERS?

Value Added Tax (VAT) shall be levied on law services as of January 1, 2004, the bar draft bill stipulates. It has been moved by MPs from all parliamentary groups, but in fact reflects the stance of the Supreme Bar Council. The circumstance that the lawyers want to pay VAT caused sincere surprise and gladness among the Finance Ministry's representatives, who attended the draft's discussion at first reading in the parliamentary Budget Commission. For several years now the ministry has been unsuccessfully attempting to achieve that.But it turned out that the Finance Ministry's joy was hasty. Lawyers' activities are not services but a basic right, underlying in the Constitution, experts explained. Therefore, the lawyers should pay taxes only when they give consultations. Otherwise, many questions arise such as how will the court levy VAT on the lawyer's commission and how will VAT be refunded?The draft projects amendments to the other taxation laws as well. The initiators propose that lawyers' associations shall not pay a profit tax, but a tax under the Natural Persons' Income Taxation Act. Presently, these associations are treated as juristic persons and pay taxes under the Corporate Income Taxation Act. The lawyers insist as well that the percentage of their normatively acknowledged expenses be increased to 50 per cent. (Currently, the people practicing liberal professions can deduct 35% of the commissions they have recieved without providing documents for the expenses they have made). If this proposal is not accepted, the lawyers want to be given an opportunity to deduct the factual costs which they can prove.

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