Were the impacts of the VAT recapitulative statement in the Czech Republic positive?
By Richard Jahoda, Grinex Czech Republic
The Czech government has presented the VAT recapitulative statement as a very powerful tool to limit tax avoidance. After one year of this measure coming into force, its impact is very questionable at best.
As of 1 January 2016, taxable persons registered for VAT purposes in the Czech Republic are obliged to submit a special recapitulative statement together with their VAT returns to the tax authorities. In the report, taxpayers have to declare all received and issued invoices, including all details describing these documents. Even the smallest of mistakes carry strict penalties, and the same applies for missing the deadlines. A delay of a few days alone can bring about a significant penalty for the taxpayer. The fact that the VAT recapitulative statement makes VAT compliance much more complicated goes without saying.
The main declared goal of the VAT recapitulative statement was to increase VAT collection. But has it really happened? In 2016, VAT collection grew by 5.4% in comparison with 2015, while the Czech economy grew by approximately 2.5%. Growth of just 5.4% is not something that would outweigh the huge increase in VAT compliance difficulty.
There is one aspect that can be considered positive about the VAT recapitulative statement. Its preparation is so difficult that it has forced businesses in the Czech Republic to invest in better financial IT equipment.
Richard JahodaGrinex Czech Republic, Prague, Czech Republic
T: +420 222 516 889
Grinex Czech Republic, founded in 1997, offers audit, tax advisory, payroll, expert opinions and accounting advisory services to Czech and international customers. It also promotes wider usage of smart IT solutions in the accounting industry.
Richard Jahoda is a Managing Partner of the Grinex Czech Republic, and is responsible for tax advisory and accounting advisory services. He has more than 20 years of experience in these areas. He is a certified tax advisor.xxx
Published: Spring 2017 l Photo: Colourbox.de