Банкеръ Weekly



Article 109 against tax frauds, was returned in the new stipulations of the Tax Procedures Code (TPC), approved by Parliament on April 24. This provision entitled tax authorities to refuse a tax credit anyone who had purchased goods or services from an inaccurate taxpayer. After much debate, this stipulation was modified, and as of the beginning of 2002 the provisions for refusal of a tax credit remained only in article 65 of the Value Added Tax (VAT) Act. In the new version of the TPC, article 109 regulates taxation of firms and private persons, who have not filed declarations, have concealed proceeds, have not maintained book-keeping, or have not been found at the declared address. Their taxes and those in cases of taxation frauds, are assessed at the discretion of tax authorities. The taxes of companies and persons, whose property does not correspond to the incomes they have declared, shall also be assessed at the discretion of tax authorities. The latest changes to the TPC introduce two amendments to that regime. First, in order to apply it, the taxpayer should not only be absent from the address he has declared, but he should also not be found there after a thorough search, substantiated by documents. This would mean that the declared address is fictitious, or that the tax authorities have visited it at least twice without finding the taxpayer and have drawn up statements about that. Secondly, when setting the tax at the discretion of tax authorities, all circumstances, specified in the code shall be taken into consideration (if they could be applied to the respective person, e.g. the subject of activities, the movement of money under bank accounts, the place where trade activiteis are carried out, the usual maintenance expenses, etc.). So far tax authorities could draw a conclusion that the concealed profits were higher than the actual, counting only on the average profits for the respective activity.The attempt to pass provisions, allowing refusal of a tax credit, was countered. More specificly, the Finance Ministry wanted to add the cases of tax preferences in the first paragraph of article 109 (which stipulates that it is applied in cases of tax frauds). Such a change is not unobjectionable, having in mind that this term includes also the increase of the right of deducting the tax credit. The MPs did not agree with that and even wrote off the definition about tax preferences in the Additional provisions of the TPC. Other stipualtions in the TPC furnished tax authorities with more distinct rules for action regarding fly-by-night companies. When after a thorough search the taxpayer has not been found at the address he has declared, it will be considered that he has received the notification, and the latter shall be enclosed with the taxation file. The same procedures shall be applied to firms, which have not specified a taxation address or have announced a non-existing street and number. A notification with a return receipt shall be considered as duely delivered even when the taxpayer has refused to receive it from the messenger.The serving of summons is an important part of the taxation procedures. For example, a tax inspection cannot begin without establishing that the writ about it has been delivered to the taxpayer. The date of receiving such notifications is important for the terms which firms and citizens should observe (e.g. the deadline for filing appeals).As the BANKER weekly has already written, the amendments to the TPC regulate the procedures for applying the agreements for avoidance of double taxation, and change the order for compulsory sale of the debtors' assets. The TPC will be probably amended again in the summer - that time because of the establishment of the National Agency for Proceeds, due to be set up next year.

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