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Czech Republic waives penalties on VAT Control report

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Czech Republic waives penalties on VAT Control report

Czech Republic introduced the VAT ledgers return last January 2016. This new VAT reporting obligation, also known as Control Report, required all taxpayers to report details of each AR and AP transaction on a periodic basis. Despite the efforts of the tax authorities to publish manuals and FAQ reports on the new requirements, taxpayers have struggled to comply with all system and content requirements.

The Czech government amended the VAT law on 29 July 2016 to waive certain penalties when this return is not submitted for an admitted reason. When a VAT ledgers return is missed, the taxpayer can apply for a waiver of the penalties by completing and submitting an application according to the instructions laid down in Guidance D-29 of the Czech authorities. This guidance also provides details as to what reasons are admitted for a justification for waiving the penalties.

VAT ledger returns have become popular in Europe in the last two years. The tax authorities are now using technology to cross-check transactions between taxpayers, hence increasing control and reducing tax fraud. Poland, Hungary, Spain and Italy have all introduced these type of returns. The problem for businesses is producing this information from their ERP system in a complete, accurate and system compliant process. Marosa has extensive experience adapting ERP systems to local tax requirements, please contact us to appoint one of our technology VAT experts to your team.