Parliament approved extraordinary measures in the financial area
In connection with the coronavirus (COVID-19) the Slovak Parliament approved several measures in the financial area. These measures are related to tax, customs duties, accounting and the financial market.
The Slovak Parliament approved yesterday the draft of the Act on certain extraordinary measures in the financial area in connection with the spreading of a hazardous infectious human illness COVID-19. The subject of the Act are measures in areas administered by the Slovak Ministry of Finance. These measures will be effective from 12 March 2020 to the end of the calendar month in which the Slovak Government will revoke the extraordinary situation (the “pandemic period”).
The proposed measures are divided into the following areas:
Measures in the areas of tax, customs duties and accounting
1. Measures in tax administration
- Missing deadlines – the failure to meet deadlines during the pandemic period will be forgiven under the condition that the respective action will be made by the taxpayer by the end of the month following the end of the pandemic period at the latest. The forgiveness of missing deadlines does not cover the submission of tax returns and payment of individual taxes.
- Tax audits – the proposed measure interrupts the periods for the performance of tax audits except for cases when the subject of the tax audit is the claimed excessive VAT deduction. In such a case the tax authorities can issue a partial protocol to the amount which without any disputes should be repaid to the taxpayer.
- In line with the proposed Act the due tax with a deadline for its settlement elapsing during the pandemic period and which will be settled by the taxpayer by the end of the calendar month following the end of the pandemic period will not be considered as a tax underpayment.
2. Exemption of goods for the support of victims of a natural disaster from VAT and customs duties
In the frame of extraordinary measures in the financial area it is also proposed to exempt goods for the support of victims of a natural disaster from VAT and customs duties. The admission of the exemption is subject to the decision of the European Commission. The European Commission acts based on the application of the member state in line with the procedures during extraordinary situations in the state of emergency. Due to this the customs office will suspend the requirement for the payment of import duties and VAT in the case of this type of goods until the decision of the European Commission will be made, under the condition that the importer will bind themselves to settle the customs duties in the case that the European Commission will not comply with the application.
3. Exemption from administrative duties
The proposed Act determines conditions that must collectively be met for the forgiveness of administrative duties – the filing is made during the pandemic period and the purpose of the filing is to reduce the negative consequences of the pandemic.
4. Measures in the area of income tax
The proposal of the Government also changes the deadlines for filing income tax returns. The deadline for filing income tax returns is moved to the end of the calendar month following the pandemic period. Within the same deadline also the income tax will be due.
The draft Act leaves the taxpayers who’s the last day of the period for filing the tax return falls within the pandemic period the possibility to extend the filing deadline also in line with the respective provisions of the Slovak income tax act (by 3 or 6 calendar months). If the deadline for filing the tax return mentioned in the filed notification on its extension will lapse during the pandemic period, the new deadline will be the end of the calendar month following the pandemic period.
The proposed Act only determines a special deadline for filing the tax return and the due date of the tax liability. All other obligations related to filing the tax return and the payment of tax, the method of filing the tax return, the persons obliged to file a tax return and similar matters remain applicable as governed by the Slovak income tax act (e.g, a new tax advance payment period will start on the day following the deadline for filing the tax return outlined in this provision).
The draft Act does not precisely stipulate in which amount tax advance payments will have to be paid, especially in the case of taxpayers who filed their tax return within the ordinary deadline of 31 March 2020. Taking the retroactive shift of the filing deadline for tax returns into consideration and that the new Act was not approved by 31 March 2020, it is not clear if these taxpayers should continue to pay tax advance payments based on their 2018 tax liability or should starting from April pay tax advance payments based on their 2019 tax liability. We assume that these and other uncertainties will be clarified. If this matter concerns you, please contact us and we will inform you about the current status.
The medialized measure for the one-off deduction of unused tax losses is not included in this draft Government’s proposal of the Act.
5. Change of statutory deadlines
The proposed measures in the tax, customs and accounting area determine in more cases new deadlines and conditions under which the deadlines do not expire, as well as conditions for eventual forgiveness of sanctions.
Below we outline an overview of selected deadlines approved by the Government:
|Filing the motor vehicle tax return for a period other than the calendar year*||end of the calendar month following the end of the pandemic period|
Deadlines under the accounting act, including the obligation to submit the financial documents to the Registry of financial statements
|end of the third calendar month following the end of the pandemic period, or the deadline for filing the income tax return, whichever will be earlier|
|Filing of income tax return (including the attribution of a share in the paid tax)||end of the calendar month following the end of the pandemic period|
|Filing the statement on the attribution of a share in the paid tax (if not attributed via the tax return)||end of the second calendar month following the end of the pandemic period|
Issuance of the confirmation on the paid tax for the purposes of attribution of a share in the paid income tax
|within 15 days of the second calendar month following the end of the pandemic period|
|Notification on the clearance of tax and on the amount of income from employment paid to individual employees without regard to the nature of the income (in cash or in kind) for the past taxable period, on the withheld tax advance payments, on the employment premium, on tax bonus and on the tax bonus for the paid interest costs||
the end of the second calendar month following the end of the pandemic period
|Annual tax clearance||the end of the calendar month following the end of the pandemic period|
|Delivery of the document on the performed annual tax clearance||the end of the second month following the end of the pandemic period|
|Filing the notification on the withholding and settlement of income tax of a provider of healthcare and payment of the tax||the end of the calendar month following the end of the pandemic period|
*for example, a taxpayer ceasing to exist without liquidation, with liquidation, on assets on which bankruptcy proceedings were announced, a taxpayer who ended or interrupted his business activities
Measures in the area of the financial market
The second part of the measures are measures in the area of the financial market, including also measures in the area of financial aid with the aim to preserve employment and performance in small and medium sized companies. The financial aid should be granted in the form of a guarantee to a loan and/or payment of interest costs from loans. The provider of this type of financial aid will be the Slovak Ministry of Finance and the mediators of the aid will the Export-Import Bank of Slovakia and Slovenská záručná a rozvojová banka, a.s.
The proposal of the Government was approved by the Slovak Parliament in the shortened legislative procedures and it should be effective from its announcement.
We are monitoring the actual situation and will inform you on further developments.