From January 1, 2020, it is proposed to apply the principle of reverse taxation for property of enterprises in insolvency proceedings. In addition, from January 1, 2021, this principle is to be applied for the pledged property, the mortgaged property, the seized property. These provisions are contained in the draft law on the tax and customs policy for the year 2020, brought forward by the Ministry of Finance for public consultations, IPN reports.
The draft law mentions that, according to the tax legislation, the calculation, reporting and payment of the VAT amount is made until the 25th of the month following the one in which the transaction was conducted. In such a situation, the economic agent holds the amount of VAT to be paid into the budget in cash from 25 to 55 days, depending on the day the transaction was conducted. Further, the legislation does not prohibit the use of these financial resources, the economic agent being able to place them in current operations, debt repayments, etc.
In the case of insolvent economic agents, according to the legislation on insolvency, they are obligated to pay the debts based on established priorities. As a result of the sale of the assets of the company in the process of liquidation, the financial resources and, in addition, the amount of VAT to be transferred to the budget accumulate. However, given that the payment of debts is often a priority, the VAT amount ends up not being transferred to the budget. On the one hand, in the case of a bank debt, the VAT amount goes to pay off the debt at the expense of the budget. On the other hand, the buyer economic agent has the right to VAT amount deduction. In such cases, State Tax Service/SFS does not have the possibility to enforce constraint measures on the insolvent economic agent due to the very low payment capacity.
To eliminate this constraint, MF proposes that these transactions be subject to the principle of reverse taxation. This means that, in case of sale of property by the insolvent economic agent (seller) to another economic agent (buyer), the latter calculates and pays the VAT amount to the budget, having the right to deduction. Thus, the aim of introducing the principle of reverse taxation is to avoid damages to the budget.
