The government bill, which amends the Tax Code as well as other tax laws, entered the approval process. We bring you the significant changes proposed. However, the final wording of the amendment may still change.

The primary objective of the proposal is to introduce other effective tools to combat tax fraud. These are new measures, such as the tax reliability index and the disqualification of persons.

Tax reliability index

The tax reliability index is an assessment of a tax subject based on the fulfillment of its legal obligations towards the financial administration and on the basis of its economic indicators such as number of employees, turnover or economic results. The proposed tax reliability index, which has so far been non-public, will be transparent and public from January 2022.

It will be applicable to entrepreneurs registered to tax and it will primarily have a motivating character. Tax subjects who will responsibly approach their tax obligations (e.g. timely filing of tax returns and tax payment) will be rewarded with benefits. On the contrary, those entrepreneurs who are not rated as reliable will be motivated to take a more responsible approach.

After the proposed amendment enters into force, the tax subject will receive its first tax reliability index by the end of the month following two years after the end of the year in which the tax subject was registered for income tax. If there is a change in the index for the particular tax subject, the tax office will send a reasoned notification of new tax reliability index by the end of the month after the end of the assessment period, which is a calendar half-year.

The notification will specify in particular the benefits for which the tax subject has been qualified and what has been assessed in that qualification. For example, the benefits to which the tax subject assessed as highly reliable are:

• preparation of a protocol within tax audits by the Tax Office on a partially basis,
• a longer, at least 15-day deadlines given by the Tax Office for the tax subject within tax audits or local investigations,
• a reduced fee for a binding opinion or a decision to use the transfer pricing method by half.

The criteria on the basis of which the tax subject will be assessed by the tax reliability index will be regulated in a decree of the Ministry of Finance. Criteria are selected obligations of tax subjects arising from particular tax regulations. The details of the claims themselves, the conditions for determining the tax reliability index, as well as the way in which it will be determined, will be published on the website of the Financial Directorate.

Disqualification of persons

Under the disqualification rule, the Ministry of Finance of the Slovak Republic proposed that natural persons be excluded from the possibility of being a statutory body for three years if the entities, where they held the position of a statutory body, did not fulfill their tax obligations properly. The reason for this amendment is the fight against tax fraud in order to improve the collection of taxes and clean up the business environment.

Other proposed changes

Another proposed measure in the forthcoming amendment to the Tax Code is aimed at reducing the administrative burden by revoking of the physical registration certificates. Also, due to the reduction of the administrative burden, it will not be necessary to report some data that the financial administration may obtain from other registers (for example, the notification obligation in connection with liquidation, bankruptcy and restructuring, etc.).

The proposed amendment also amends Act on value added tax by a set of legislative measures aimed at improving the collection of VAT. As the most important, there will be a new possibility for a VAT payer to verify that he is paying his supplier a consideration to a bank account known to the Financial Directorate. All VAT payers will be required to notify the Financial Directorate of their bank accounts which they will use in connection with their business activity. They will do so electronically via a pre-filled form. The Finance Directorate will publish the list and update it regularly. If the customer pays for the goods or services to an account other than the one notified, he may be exposed to the risk that if his supplier does not pay the VAT on this transaction, he will be liable for it.