The amendment to the VAT Act that is proposed to become effective on 1 January 2011 or alternatively on 1 April 2011 (depending on decision of the Parliament) is currently being discussed in the Parliament. Some of the important general changes: 

Timing of input VAT deduction: Input VAT deduction can be applied no sooner than for the taxable period in which the VAT payer receives the invoice. The VAT amendment may lead to a lack of cash flow as current rules are not so strict.

 Invoice requirements: If the received invoice does not contain some of the required information (information decisive for the tax calculation or tax ID), the deduction will not be possible. 

VAT rate: VAT charged in an incorrect rate cannot be recovered. 

Correction of tax base: The rules for correcting the tax base and issuing credit notes and debit notes will be readjusted. It will always be necessary to issue a credit note or a debit note (contrary to the current status). 

Customers in Default: It should be possible to acquire the VAT originally paid in the case of receivables against debtors in bankruptcy. 

Guarantee for unpaid tax:  Customers may become liable for VAT not paid by their suppliers in case of local supplies.

Tomas Seidl, Partner
tseidl@deloittece.com

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