Банкеръ Weekly



Many of the questions provoked by the so called VAT account will be eliminated as the amendments to the regulation for application of the Value Added Tax (VAT) Act were published on June 28. Some of the problems with this account have not been solved yet, however.The major purpose of the account is to reduce the number of tax frauds. If a company remits its tax due from its own VAT account to the same type of account of its supplier, it will automatically be given the right to restore a tax credit, no matter whether its supplier has acted properly or not.All companies registered in accordance with VAT regulations are obliged to use the extra service. By August 1, 2002 some 70,000 companies should open an account of this type with any of the banks that offer the service. Fees and commissions will be fixed by each credit institution. However, low fees are not expected to be the leading argument for the choice of a bank. Funds in cash are not accepted to fill the VAT accounts.Companies need to fill them from their current account with the same bank. That is why they will most probably choose the banks that have been their traditional partners.The VAT account is obligatory, but everyone is free to decide whether or not to use it. There is no restriction on the number of VAT accounts each company can open. These accounts can only receive money from VAT accounts of other companies or from another VAT account of the same company. On the other hand, payments from a VAT account are only possible towards the VAT accounts of suppliers or towards the republican budget. The account cannot be used for payment of other tax liabilities. It's impossible to draw cash funds from it either.When companies want to pay the tax due to a VAT account of their supplier, they need to specify in their money order the number of the invoice of the payment. The basic price of the deal (the amount not including VAT) must be paid separately. It can also be paid in cash. However, the buyer can use the right for a tax credit even if only part of the amount of the deal has been paid. This injustice is valid even now - the tax is calculated at the time of delivery. It means that the seller must pay VAT, no matter whether or not he himself has received the money of the deal. The buyer, in turn, (provided he has an invoice) is allowed to use a tax credit that he hasn't paid. The introduction of the special account will stimulate buyers to avoid delaying the payment of the value added tax. They are expected to pay the tax to their supplier's VAT account only in case that they suspect he may forget to pay it to the budget.The other reason for buyers to prefer this account is that they are able to restore a tax credit in a short period of time. The law allows that companies, which have paid through a VAT account over 80% of their taxes due for each tax period, restore their taxes within 45 days instead of in three months.The same right will also be given to importers, if they pay the tax to the customs from their VAT accounts.

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