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Views/ Highlights of Recent Tax Legislation
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Branimir RajšićSenior Consultantbranimir.rajsic@karanovic-nikolic.com
31/07/2015
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Based on amendments to the General Tax Act, published in the „Official Gazette", No. 78/15 on 17th July 2015, an ordinance on obligatory opinions, tax return amendments, statistical reports and tax settlement is set to enter into force on 24 July 2015.

Important highlights:

Obligatory Opinions of the Tax Administration

Obligatory opinions of the Tax Administrative may be issued may be issued in the following circumstances:

  • to determine taxable supplies for the purpose of tax prepayment division;
    in the application of tax regulations  regarding investment projects in Croatia valued over 20,000,000.00 HRK;
  • in determining the taxable base for profit tax on a merger, division, partial division,  transfer and swap of shares, with exemption of tax procedures prescribed in Articles 20.a to 20.r of the Profit Tax Act;
  • in applying agreements on avoiding double taxation in regards to profit and income tax obligations; and
  • to determine business operations not comparable or customary to those operating in Croatia

Who can submit a request?

A request for an obligatory opinion can be submitted by:

  • a resident or non-resident taxable person, authorized representative or tax advisor;
  • a natural or legal person not classified as a taxable person or his/her authorized representative or tax advisor.

Who issues the obligatory opinion?

Obligatory opinions are issued by Tax Administration, Obligatory Opinions Counselling Body, established by the Tax Administration manager's decision.

How can a request be submitted?

The first step to obtaining an Obligatory Opinion is to submit a request for a verbal preliminary discussion with the Tax Administration regarding the facts and circumstances of the case that could be submitted for consideration.

The request should be submitted to the competent branch office of the Tax Administration or Large Taxpayers Office.

When will the Obligatory Opinion be issued?

An Obligatory Opinion shall be issued within 60 days from the official submission date. In certain specified cases this period may be prolonged.

What are the costs involved?

The costs in obtaining an Obligatory Opinion are set in the range of 5,000.00  – 30,000.00 HRK.

Tax settlement

The possibility of tax settlement between a tax authority and a taxable person is prescribed by newly determined obligations during a tax audit.  The possibility of settlement remains open up until the tax audit minutes are served.

Rules Governing of Tax Settlements

  • Newly determined tax obligations determined during an assessment referred to in Article 1, paragraph 2 of the General Tax Act may be reduced by up to 5%.
  • Obligations determined on the basis of penalty interest calculated during a tax audit, may be reduced in the range of 10% to 100%, if the determined amount is paid on the day of settlement, and is proportional to the amount of previously paid newly determined  obligations.
  • Penalty interests are reduced by 50 % for paiyng either the entire amount of newly determined obligations or the amount remaining, within 90 days of reaching a tax settlement.

The goal of tax settlement is:

  • to increase collection of newly determined obligations during a tax audit, shorten the duration of tax proceedings (no objections, appeals, filed complaints);
  • to provide incentives for taxable persons to voluntarily pay tax liabilities during the assessment of the taxable base;
  • to reduce penalty interest to be charged should the taxable person pay the newly determined obligation during a tax audit and renounce his/her right to an appeal, in which case the tax authorities will waive the misdemeanour proceedings. 

Tax return amendment

The tax return amendment procedure, terms and deadlines are stipulated in more detail. The Tax Administration may, when it deems necessary, request a taxable person to amend a tax return within 30 days of the receipt of an invitation until the statute of limitations expires.

If a taxable person refuses an invitation, the Tax Administration will initiate a tax audit to verify the credibility of data and bookkeeping documentation. 

Statistical reports (unpaid and due receivables)

Who must submit statistical reports?

VAT tax payers with due, unpaid receivables in their business books are obliged to submit the statistical reports on the relevant taxation facts.

When?

VAT tax payers are now obliged to prepare a statistical report with the status of due and unpaid receivables on 30 March, 30 June, 30 September and 31 December of each financial year, up until complete charge or write off. Receivables should not be older than six years.

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