Inspectors on site and penalties in fight for financial discipline – What does the Law on tax procedure and administration bring?

New Law on tax procedure and tax administration has been adopted and this way, at least the governmental administration says, starts uncompromising fight against grey economy and tax debtors. It will be implemented through severe controls and high penalties.

Announcing the law, the Minister of Finance, Lazar Krstic, explained that the government will control companies twice a month and the head of the Tax administration, Aleksandar Miljkovic, revealed that in tax payment collection they are planning to implement all legal measures available- from property attachment to mortgage execution.

When eKapija asked the Ministry of Finance how the control will look like, they explained that the new risk analysis system will lead to target controls.

- Tax payers will be controlled based on the risk analysis and there will be no difference between small, mid-sized or big companies. When we speak about controls, first of all we think employee registration control and fiscal policy. Also, it is necessary to mention that flat rate payers will also be included in controls.

Apart from that, they say that the Tax administration control will significantly improve in a way that both they and tax officers who did not enrolled from the faculty will be able to conduct controls.

- Apart from that, additional 400 people who are freed from administration in the next period will carry out on-site tax payers’ controls. So far, the Tax administration has had more than 2.000 inspectors and the plan is to increase the number in the upcoming period through further business processes development. Inspections will control as many times as risk analysis requires. When it comes to tax payers who have a history of violation of the regulations, controls will be performed often. When it comes to penalties, they are governed by the law and depend on the type of violation, including cash penalties, goods attachment and temporary measures of ban on activity.

The Law on tax procedure and administration implies better and more efficient organization of the Tax administration, it clearly distinguishes responsibilities within the Tax administration in order to improve financial discipline, the representatives of Tax administration say for eKapija.

(Photo: Ivana Vuksa)

Banks control as well

Apart from additional inspectors on site, banks will also control tax payers. So far, banks have been obliged to inform Tax administration on payments of income for all citizens and the changes of the Law on tax procedure and administration only define the data exchange in a better way. The new thing is delivery of data with respect to payments to physical entities’ foreign currency account.

As the Law says, bank shall deliver data on payment orders, transfer orders and payment codes to the Tax administration in electronic form until 5th in a month for the previous month.

Then, banks will have to deliver data on paid amounts of physical entities within 30 days as of the day of the payment as well as on payments to the income tax payers’ accounts based on freelancing activities in a calendar month within 15 days upon a month expiry.

Escape from grey or into grey zone

The opposition members criticized changes of the law on tax procedure, especially the penalty amount, estimating that it will destroy SMEs while Krstic answered that it will not affect SME’s but the ones who do not pay tax.

(Photo: Ivana Vuksa)

Changes of the law govern penalties for those who do not stick to tax law totaling RSD100.000 to two million.

Penalties

Non-submission or untimely tax return submission, non-payment or untimely tax payment will total at least RSD 500.000 for a company and 100.000 for entrepreneurs.

Reporting of smaller tax amount and providing incorrect data to tax return will cost at least 200.000 for companies and 100.000 for entrepreneurs.

Undelivered documentation with tax return, evidence registration forms and requests, announcements and documents will total RSD 100.000 - 2.000.000.

Actions against business rules governed by the tax law will cost RSD 100.000-2.000.000.

Electronic registration of other taxes underway

Tax return is submitted solely in electronic form for withholding taxes in line with the law governing income tax and the law governing obligatory social contributions, VAT tax as well as for:

1) legal entities’ income tax– as of October 1 2014
2) excise and tax on freelancing activities for entrepreneurs running business books– as of January 1 2015;
3) citizens’ annual income tax – as of April 1 2015;
4) all other tax forms - as of October 1, 2015.

Until the day of transfer to tax return submission solely in electronic form, registration can be submitted directly or via post.

For the complete text of the Law

click for PDF file