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Czech Republic Amends New VAT Rules

by Lorys Charalambous, Tax-News.com, Cyprus

29 December 2014


The President of the Czech Republic, Miloš Zeman, has approved last-minute amendments to the country's VAT rules for 2015, revising requirements relating to the new regular "control messages" that businesses must submit to help the Government counter VAT fraud, and postponing the inclusion of construction sites into the 21 percent VAT rate.

The "control messages" are being introduced mainly to counter missing trader intra-community (MTIC) fraud, also known as carousel fraud. The scam involves the sale of goods across the European Union's internal borders without VAT, and their onward sale to the domestic market inclusive of VAT, normally at a discount. MTIC occurs when VAT is collected on the sale of imported goods to the domestic market inclusive of VAT, as the tax collected is never remitted to tax authorities and the seller disappears.

The messages must contain any data that the tax authority deems necessary for tax administration purposes.

One of the new amendments specifies that businesses registered for VAT payments will have until the 25th day of the following month to make their reports, while self-employed entrepreneurs will now only have to make their reports once every quarter rather than monthly.

Meanwhile, the tax on construction sites will not now be introduced until the start of 2016. The delay is so that construction firms will not have to revise the prices of newly constructed properties in cases where sales have already been agreed for next year.

The start of 2015 will also see the introduction of a new ten percent VAT rate, as a lower rate for books, pharmaceuticals, and infant formula alongside the existing higher reduced rate of 15 percent. The Government says this will boost household spending, despite misgivings from the IMF.

TAGS: compliance | tax | value added tax (VAT) | VAT cross-border transactions | entrepreneurs | tax authority | legislation | Czech Republic | construction | legislation amendments | VAT compliance matters | Europe | Tax | Tax Evasion

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