Items that are subject to the tax administration control
The Tax Administration, which is under the jurisdiction of the Ministry of Finance, is authorized to control the regularity of the completeness and calculation of public revenues through the activity of the business entities, which perform their activities within the territory of the Republic of Serbia. The Ministry is the body which adopts annual control plans realized by competent local tax administrations.
The completeness of public revenue control can be partial or total. The control of the public revenue calculation and collection is most commonly related to fiscalization, VAT calculation, withholding tax and contribution calculation procedures, etc.
When it comes to fiscalization, the most common object of control is related to fiscal receipt issuance. This liability is prescribed by the Law on Fiscalization (Official Gazette of RS no. 153/2020). If irregularities are identified during the control process, the competent tax control bodies can impose cessation of activities as a punitive measure.
As a multi-stage consumption tax, VAT is one of the most common tax control forms. VAT is determined by self-taxation – taxpayers submit tax returns on their own, specifying the amount of tax for the previous turnover period and the amount of tax calculated for their own supply of goods and services, as well as the positive or negative difference between these two amounts, which shall be paid to the government or refunded by it. The latter is the most common “indicator” that the regularity of the calculated preliminary or personal VAT shall be controlled.
Apart from the mandatory tax calculation, the calculation of payroll, paid leave benefits, temporary and periodical job contracts, copyright contracts and similar liabilities include the obligation to calculate mandatory social insurance contributions (except in the case when there is no net amount payment). An object of control can be calculation methods that depend on contractual liabilities between natural persons and a legal entity. They are very complex and require a thorough check and compliance of the contract to the current positive laws, applicable on the territory of the Republic of Serbia. An object of control can also be the payments made by transferring money from a company account or money withdrawal in the favor of the owner, which are treated as assignments, and company services used by the company owner for his personal needs and consumption.
Over the last year, there have been controls used to determine if taxpayers had lost the right to fiscal benefits and direct levies within the government support package due to the economic disruption caused by the coronavirus pandemic.
Taxpayers receive a note about the beginning of the tax control, issued by the competent local tax authority. Taxpayers can file a complaint, first verbally and then in writing, within 24 hours from the moment of reception of the tax control order, requiring the control to be postponed.
Taxpayers have the right to be present during the tax control and they have the obligation to inform and give statements to a tax inspector, and enable him to inspect business documents. It is also good to insist on “paper trails”, i.e. that all requests are set out in writing. It is recommended that the taxpayer gets professional assistance when preparing a response to the tax authorities’ requests.
The question related to penalties for the violation of the law arises during the tax control process as well. In this aspect, the legislator has been trying to cover as many violations incriminating tax regulations as possible, so that there is also an overlap between certain tax violations. In reality, this means that the same tax violation is covered in two or more different ways. Subsequently, there are penalties for tax violations related to a legal entity and a responsible person of the entity. The penalty amount spans from 50,000 to 2,000,000 dinars for legal entities and entrepreneurs, i.e. from 5,000 to 150,000 dinars for the responsible person of the legal entity for the same tax violation.
The author: Sanja Mitić