Code of Tax Procedures: The new landscape of tax controls

A new landscape for its controls forms the Code of Tax Procedures, which was put into public consultation by 8 April. The new digital tools of ADE to control taxpayers completely change both the philosophy and the process of controls, ERT notes. Clear rules are established, a specific way of selecting checks, specific time limits for their completion, while auditors will be recorded with sound and image devices every second of the audit process. In parallel with the bill, for the first time, the process of calculating the intermediate tax is introduced by the competent authorities to determine the minimum amount for businesses opening for a short period of time and then becoming extinct. In particular: The duration of the tax audit shall be 1 year and may be extended once by 6 months. The condition for granting the extension is to initiate the audit procedure within the initial period of the tax audit. Further extension up to 6 more months is possible in exceptional cases specifically justified. The duration of the check shall not suspend or prolong the limitation time. There is currently no provision for the maximum duration of the audit, which is determined by the officials carrying out it. The possibility of interim tax determination shall be established where there is a combination of criteria from which a direct and imminent risk of tax evasion arises (e.g. seasonal newly established enterprises, or where there is specific evidence that the taxpayer intends to leave the country. Today, there is a provision in force for a preventive determination of the tax, but it does not apply in practice, as it only concerns cases where there is evidence of a departure from the country. Now, the provision becomes more specific and effective in its application. The possibility of intermediate tax determination was considered necessary as it is often observed that seasonal newly established companies operate for a short period of time and close from one day to another without paying a single euro tax. The concepts of partial, complete, on-site or remote control are clarified. Some are the checks carried out on specific issues of a tax or tax item, charge or levy, for one or more tax periods or one or more tax years. Full control is carried out over all relevant transactions for one or more taxes or one or more tax items, fees or contributions, for one or more tax years or management periods or tax cases. Partial and complete control is definitive. A new partial audit order for the same taxpayer may not be issued covering a period of time and a type of control which has already been subject to partial or full control in the past, unless new elements that could not be known to the Tax Administration arise. The tax audit shall be carried out at the establishment of the taxpayer (on-the-spot check) or at another place where the data from the taxpayer is presented (a remote check). AADE now has digital tools at its disposal that allow controls to be carried out by the office of auditors while using special algorithms, gathering data from social media and helping artificial intelligence has the ability to identify tax evasion sites and revealing hidden incomes. Changes the way cases are selected based on the new criteria The notification of the tax identification act must be made within the five years provided for in the limitation. Until now, it has been sufficient over the five years that the act has only been adopted and that it should be notified to the taxpayer. Tax collectors who keep books based on the simplified accounting system (mainly skilled and small enterprises) are exempt from the obligation to provide their accounting records to the tax administration, provided that all relevant data (incomes – expenses) are transmitted to the myDATA platform. A fine of EUR 2,500 is currently imposed for the failure to produce the books.