Wednesday, December 09
In just four weeks' time, the invoice-matching tax system takes effect. Until Erik Best discussed this in his recent Final Word, I was not aware that it was starting so soon.
Were you aware of it? And if you are running a small or medium sized business, have you considered how much this is going to cost you?
Every time you file a VAT return you will have to also send the Tax Office copies of every invoice you have both sent to customers and received from suppliers. Do you even know how you will do this? I don't. The submissions must be "electronic" but I do not know whether this means scanning the documents into a PDF, or if there will be some special software that must be installed, or whether a form must be filled in on-line detailing each invoice.
Stop now please, and consider how much work this will mean for someone. If that someone is at an external accountant's office, as will be the case for many SMEs, that person's time will be paid for - by you.
And what will happen to all this data? Does anyone seriously believe that the already over-worked and inefficient tax offices will ever be able to work with this mountain of new data? What (or who) would prompt them to even look at it? And if they did, would they interpret the data correctly?
If they do decide to compare a few of your invoices, and find something "wrong", you will not be able to appeal the decision. The tax office will even, I am told, be able to take the fine directly from your bank account.
This a quite staggering affront to the concept of democracy and the rule of law, and it is all happening next month.
I expect the impact of this will sink in when SMEs (and even self-employed people who pay DPH) start to received demands from their accountants for increased fees. At least then the basis will be created for a protest campaign. All of us should prepare an invoice to be sent to Andrej Babis, wherein he, as Finance Minister, can reimburse us for these costs. After all, this "policy" was not in ANO's election manifesto, and nobody has explained why this burden should be placed on us. Babis claims that it will increase tax revenue. That is ridiculous. We all collect all these invoices anyway and file them in our end-of-year returns.
The best deterrent for those who are cheating is to increase the number and quality of tax inspectors. They would carry out more, and more thorough audits on those who are suspected of really big tax avoidance or evasion. Examples would be the many "Czech" firms whose HQ is now mysteriously located in the Netherlands, Cyprus or the British Virgin islands. Or those global firms who are being investigated in other parts of Europe, such as Google, Amazon or Starbucks. That is where the big money is. But instead Mr Babis wants me to pay so that he can look at my company's invoices whenever he likes, without announcing a full audit of my company. It would be hilarious, if it were not so sinister.
We need a campaign of civil disobedience to stop this ridiculous new law.