Important Changes to the Tax Act

The Ministry of Finance has presented a draft amendment to the Tax Act. The proposed reforms aim to streamline and simplify certain tax procedures, as well as to adapt the legislation to the realities of the current economic environment. In practice, however, while some changes are favourable, others are highly unfavourable for taxpayers and members of management boards of incorporated companies. Among the most significant proposals are new rules on the prescriptive period for tax liabilities and amendments to the reporting requirements for reportable tax arrangements.

From the taxpayers’ perspective, the most notable change is the abolishment of the possibility to suspend the running of the statute of limitations for tax liabilities by initiating fiscal crime proceedings. Revenue authorities have often used this provision to artificially extend the prescriptive period, and its abolishment is clearly justified. However, it is proposed to replace it with a new measure allowing a criminal court to hold a taxpayer (or his representative) liable for fiscal crimes even after the statute of limitations on the tax liability has expired — something that is currently not possible. Moreover, if a conviction is handed down, the perpetrator of the tax offence will be required to pay not only a fine but also the entire amount of the unpaid tax.

Tax liabilities to which the General Anti-Avoidance Rule (GAAR) applies will also be subject to a longer prescriptive period. The commencement of GAAR proceedings will suspend the limitation period for the tax liability, but for no more than two years.

The proposals are currently at the public consultation stage. Their final shape is not yet known, so it is worth monitoring developments as they unfold.

If you would like to understand how the new regulations may affect your business, please contact us​. Our team of experts will be pleased to help you interpret the new rules and prepare for the upcoming changes.