IB Grant Thornton: Amendment to the Tax Code
18.11.2010Company: Amcham
The most important amendment changes
Amendment to the Tax Code
The new tax code has not become effective yet and the Ministry of Finance has already prepared an
amendment that was sent to the professionals for comments. There were several reasons for the amendment; incorporation of the requirement of the coalition agreement for the extension of the period for tax assessment and specification of the law and correction of the mistakes in the original version.
The most important amendment changes
Change of the holder of procuration status
According to the current statutory text of section 25 of the Tax Code the holder of procuration (in Czech
“prokurista”) has the status of a representative. Section 41 of the Tax Code specifies that if the addressee has a representative, the documents are addressed to this person only. In practise it would mean that if the company has the procuration established the documents would not be addressed to the entrepreneur but to the holder of procuration only so the usability of the data box would be limited. The holder of procuration shall be embedded in section 24 between persons entitled to deal on behalf of the legal entity, in the similar way as a statutory body.
Power of Attorney
The current wording in Section 28 requires the cancellation of the previous power of attorney by the
principal or the attorney so the new power of attorney could be effective. The reason for the submitted change is that there might be doubts as to which power of attorney should be considered as the valid one. The new amendment says that if principal chooses a new attorney, the original power of attorney is being replaced by a new one to its full extent.
Extension of the time period set by the tax administrator
An important change of Section 36 Paragraph 3, regarding the decision of the tax administrator about the taxable person request for extension of the time period, is proposed in the Amendment. Current version says that if the tax administrator does not issue a decision before the end of the period extension of which is being demanded, the request is granted. Newly proposed text specifies that the tax administrator can decide until the end of the period by which the original time limit is being extended. According to the Ministry of Finance the reason is elimination of the possibility that the tax person submits an application for the extension of the time period, by e.g. 10 years, on the last day of the original period, therefore the tax administrator will not be able to make a decision on time, and the time period will then be extended automatically. However the Chamber of tax consultants does not agree with such text change as it would signify uncertainty for the tax person because until the end of the original period the tax person will not know if the tax administrator granted the extension or not.
Change in the length of the period for tax assessment
The change of the period length for tax assessment from three to five years in Section 148 Paragraph1 is being proposed. This change reacts to the request of the coalition agreement. Chamber suggests the
acceptance of this proposal, however taking the assurance of legal safeguard and impact on other tax acts into account they suggest using the proposed extension only in the case of such taxation procedures which will start after the tax code dones into effect on 1.1.2011. According to our information this article will not be included in the amendment and will be proposed again during the next stage of tax reform.
Sequence of arrears payments
There is an amendment in § 152 saying that tax paid on the due date shall be used on older arrears of taxes only then to the tax declared for that period and in the end to the tax attribution. The reason is that the tax person would not have any unnecessary default interests. The Chamber of tax consultants has also many comments to the amendment. One of the most important applies to § 46, in which the delivery
effect is being dealt with. The Chamber suggests letting out the provision, saying that in case of expiry
of a period the postman throws the document into the recipient’s mailbox. The reason for that is the
breach of trust of the people involved in tax administration in tax secrecy by leaving the insertion of documents into the mailboxes not specified by any law and obviously not assigned to the addressee to the postman’s own free will. In this way the details about person’s income or status of trading company can be endangered.
Ing. Ondřej Štedrý
IB Grant Thornton
Na Bojišti 18
CZ-120 00 Praha 2
T +420 296 152 111
F +420 296 181 483
E o.stedry@ib-gtpraha.cz
