When the VAT Control Statement was introduced in 2016, many feared the changes that were linked to this new tax report. The transition to the VAT Control Statement that each VAT payer must provide along with the VAT return required a re-arrangement of systems, an adjustment of the accounting policies and an adjustment of the relations with business partners. Now, almost three years later, we can say that the VAT Control Statement partially met the expectations of the professional public. “First of all, we expected an acceleration in the course of inspections because the Tax Administrator has most of the data available from the VAT Control Statement and it was fulfilled,” said Jaroslav Beneš, director of the Tax Advisory team at Deloitte.
More systematically and more efficiently
Did it prove itself in practice then? What kind of positives did it bring and where are its weaknesses? What tool facilitating the whole process did Deloitte come up with? These are some of the topics of the seminar on VAT Control Statement where Deloitte experts talked about their experience and so did, with the same enthusiasm, the extraordinarily active participants of the business breakfast.
The VAT Control Statement brought a shift from a random Tax Administrator’s inspection to a systematic inspection of all tax documents. “We were accustomed to the fact that the Tax Administrators came to the company, requested a file, inspected the documents, checked if all legal requirements were met and marked them as done. We have really moved far away from this practice,” said Dana Polívková, Tax Department Manager, and she adds: “Nowadays, Tax Administrators have lots of information and they know how to work with it. For example, they have the possibility to check data systematically for each month and they can compare data not only for a certain period, but also for one specific business partner. Moreover, they do not only have VAT data, but also some information related to income tax, transfer pricing, EET data, or publicly available registers. I think that Tax Administration has made a big step forward in terms of technology and data analytics.”
As a result of the VAT Control Statement, there is now a greater probability of detecting doubts and assessing additional VAT and related sanctions.
Theory is grey but the tree of life is ever green
On the other hand, practical experience shows that the VAT Control Statement sometimes adds a new wrinkle to corporate accountants and brings along more work. The seminar participants agreed that it depends on how a particular Tax Administrator interprets the Tax Code and how strictly the compliance is required. Some administrators then require from the companies unreasonably extensive evidence, or they send companies a call for correction due to inconsistencies which equal few cents and the companies are then required to send a follow-up report or an explanation within five working days. In such cases, Dana Polívková advises to ask yourself what is still acceptable in order to maintain good relations with the Tax Administrator and what is already an unnecessary administrative burden. “They do not have the right to ask for copies of all tax documents listed in the record if it is not relevant, and especially not if it is requested only by phone or e-mail. We recommend that you ask the Tax Administrator for an official call,” advised Dana Polívková. Jaroslav Beneš also adds that in the case of an official call through a data box, the Tax Administrator is obliged to write the reason for its request, which is not mandatory by phone or e-mail.
Sometimes, it may happen that a call for presenting a VAT Control Statement is forgotten because of illness or vacation and the Tax Administrator will then impose a fine on the company. It is good to remember that once a year it is possible to ask for a remission of the fine for failing to submit a VAT Control Statement if the company is considered reliable in other respects. In this case, it is highly probable that the Tax Administrator will grant the request. However, it must be taken into account that it may not be immediate and that it may take a few months for the request to be granted.
Four most important pieces of information you should pay attention to in your VAT Control Statement:
- Correct period
- Valid VAT number
- Correct tax point date
- Correct registration number
Application taxCube – smart help in submitting (not only) the VAT Control Statement
During the seminar, our tax experts introduced the participants to Deloitte taxCube, which helps users prepare and submit all VAT reports. The system allows you to integrate data from different sources and reports (for example from accounting systems) and automate routine operations.
See also other tools that will help you safely navigate the sea full of tax obligations. Visit market.deloitte.cz.