Thedy & Partners analyses the draft amendment to the Tax Ordinance: The drafter removes the law’s ‘defects’
The draft amendment to the Tax Ordinance provides for the rectification of several 'glitches' in the procedure, as a result of which the tax authorities shorten the time in which they have the opportunity to determine the tax liability or tax loss for taxpayers.
The first of the ‘defects’ to be remedied concerns the solution to the ‘problem’ of obstructive initiation of proceedings to supplement decisions. According to the MF’s analyses, the submission by taxpayers of requests to supplement decisions results in up to 77 days of exhaustion of the limitation period.
Thus, the draft provides for the addition of § 2a to Article 70 of the Tax Ordinance, which is intended to prevent the above-mentioned exhaustion of the limitation period for supplementing a decision, according to which the course of the limitation period will not start and the one started will be suspended from the date of delivery of the decision of the body of first instance determining the amount of the tax liability/tax loss until the date of filing an appeal.
– Some taxpayers must reckon with an extension of the tax liability limitation period. This is because the amendment to the Tax Ordinance proposes a change to the way in which the limitation period for the right to issue a decision establishing a tax liability for taxation of income not covered by disclosed sources or derived from undisclosed sources is calculated. Today, a tax liability for taxation of revenues not covered by disclosed sources or originating from undisclosed sources does not arise if the decision was delivered after the lapse of 5 years, counting from the end of the calendar year in which the tax obligation arose. After the changes, the 5-year limitation period will be calculated from the end of the calendar year following the calendar year in which the tax obligation arose, points out Justyna Chylińska, senior consultant at Thedy & Partners.
Another ‘glitch’ is the ‘clarification’ of the final moment of suspension of the running of the limitation period of a tax liability in the event of a complaint to the WSA. Currently, the limitation period for a tax liability is suspended as of the date of filing a complaint with the WSA and continues to run as of the date of delivery to the tax authority of a copy of the WSA judgment with a statement of its validity, regardless of the return of the case file to the tax authority by the WSA. After the amendments, the statute of limitations for tax liabilities will only be “suspended” from the date of delivery of the case file to the tax authority.
– This is clearly a disadvantageous change for taxpayers. Firstly, it extends the period when the suspension of the deadline takes place. Secondly, the taxpayer will not know when the tax office received the returned file,” notes Justyna Chylińska.
The next two ‘glitches’ to be fixed concern the situation when information is obtained from a foreign tax administration and with regard to the statute of limitations for tax liabilities secured by a mortgage or a tax lien.
If you would like to learn in more detail about the planned changes in the scope we have described – please do not hesitate to contact us.