Liquidity and VAT The state intentionally delays the payment of due obligations in order to collect fines from entrepreneurs who have not paid VAT on time because the state has not settled due claims.
Written by: Ivica Grčar
[email protected]
I received a letter from a medium-sized entrepreneur from Dalmatia (details in the editorial office). The problem of liquidity and VAT is not new:
‘Collecting due unpaid claims is a true art. And in order to maintain the level of turnover, we, medium and small entrepreneurs, resort to various solutions, from compensation in goods to agreements on installment payments, and finally to enforcement. On the other hand, there are costs, both fixed and variable, that we must settle within the specified deadline. And again we manage and strive to be business responsible.
Article 29, paragraph 1, point 6 of the VAT Act, however, stipulates that a taxpayer will be fined with a monetary penalty ranging from 2,000.00 to 500,000.00 kuna if they do not calculate and pay the due amount of VAT or if they do not pay it within the prescribed deadline (Article 19, paragraph 1).
In practice (experienced, not just hypothetical), this means the following: if my company does not pay VAT on the day it was due, it will not only pay a high late interest but will also pay a penalty for the delay. Specifically, in my case (both times) due to partial delays of about 10 or maybe 15 days, never more than 15 days.
Draconian Penalties At the same time, the state (especially the Ministry of Finance), which has the legal right to impose draconian penalties for delays in the payment of our obligations, settles its obligations to us with significant delays of several months, in some cases even years, which you can convey to Mr. Šuker.
Two participants in the payment transaction are in completely different positions! I know it is about regulations, but the fact that one participant pays a penalty for delay while the other can delay as much as they want, do you think, Mr. Šuker, that this is constitutional (according to the rule of equality) if you already acknowledge that it is not fair?’ – asks the entrepreneur in his letter.
No VAT Deferral!
The tax officer does not know the tax inspector
The state budget needs money, as the state treasury is becoming increasingly difficult to fill. Šuker has ordered tax officials to expedite the collection of due and unpaid VAT, and through the media, he has told entrepreneurs: ‘Just reach out to us if you have difficulties, we are people, we will come to an agreement!’
The entrepreneur who wrote to me says he contacted his tax officer to postpone the due VAT obligation for a week or two, but the officer replied that she has nothing to do with tax inspectors, as the inspection is a separate service within the Tax Administration.
And indeed, every entrepreneur who is visited by the tax inspection ‘has to fend for themselves as best they can’. Everyone thinks in the way: ‘The inspection has come to control a certain segment of my business’, instead of entrepreneurs uniting and jointly analyzing the inspection’s procedures and, if necessary, jointly, not individually, requesting a review (and legality) of the tax inspection’s work.
‘Check’-controls Tax inspectors have recently favored ‘check’-controls of taxpayers who are late with VAT payments. Simply put, inspectors list VAT debtors and go to them for a ‘safe’ check. In the ‘check’-control, they verify part of the VAT calculation with the entrepreneur being inspected using data from the entrepreneurs with whom that entrepreneur has done business. And if the data proves to be identical, the inspectors do not leave ’empty-handed’, but impose a penalty for the delay in VAT payment ranging from two to 500 thousand kuna plus a penalty for the responsible person. The penalty is paid regardless of the prescribed high interest for the delay in VAT payment.
However, some entrepreneurs do not have to pay the penalty because the inspection ‘does not visit’ them, while others must pay the penalty even though they are late with VAT payments by at most 15 days because they cannot collect their due unpaid claims, often precisely from the state.
Tax inspectors regularly penalize entrepreneurs with liquidity difficulties for delays in VAT payments, despite the fact that the state is the main cause of those difficulties. It could be said that the state intentionally delays the payment of its due obligations in order to collect significant penalties from entrepreneurs to whom it has not paid for late VAT payments – as an addition to increasingly lower tax revenues.
We invite entrepreneurs to present their problems in appeal procedures or in administrative disputes against decisions on taxes, surtaxes, contributions, decisions on expropriation, decisions of regulatory agencies, or decisions in administrative procedures of various registrations, especially regarding the registration of ownership rights, etc.
Following your writings, in ‘Justice for All’, by pointing out the absurdities in individual cases, we will highlight the shortcomings of the system as a whole and thus support the readers of Lider as individuals in their unequal disputes with the cumbersome state administration.
Contact:
mail: [email protected]
tel. 01/6333-524
address: Ivica Grčar, Lider,
Savska 41, 10.144 Zagreb
