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Ivan Fučík | May 2, 2018

Tax Administration – Tax Code

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The Tax Code consists of procedural rules regulating the rights and obligations of tax subjects, third parties, as well as the methods and practice of tax administration. In harmony with the meaning of taxes itself, the main aim of the Code is to ensure the right way of detection, of determining the amount of tax and ensuring its payment. From a statutory viewpoint, taxes are here to ensure that tax subjects take part in costs that are inevitable in order to care for the general needs of the whole of society. However, it is important that this prolonged arm of the government, which the financial administrations are, does not hold gathering of funds for the security of public goods as its one and only aim. There is need for the rights of the tax subjects to be respected upon the application of individual procedural institutes in accordance with the principle of proportionality and minimizing interference so that the procedural method is not out of proportion and does not interfere with the autonomous sphere of the tax subject.

The cooperation between tax subjects and the tax administration happens through individual tax managements divided into sub-procedures. Tax management represents a more narrow concept than tax administration. It is a specific proceeding about a specific tax, while tax administration a term encompassing other things like: missions on the ground, search activity, seizure, removing of doubts, tax inspections etc. In cases of uncertainty or conflict, they are the main guide for how to follow and act according to the principles of the Tax Code, which among else include the principle of proportionality, procedural equality, economy, free assessment of evidence, legitimate expectations, and material truth. Whether a tax management is successful or not is largely determined by the tax subject and the extent to which they fulfil their duties. The principle which the tax administration stands on states that the bearer of the burden is the tax subject. The claim of the taxpayer is subsequently reviewed by the tax administration, which can either accept or change the claim in accordance with the legislation. The aim of tax management is for the final tax to correspond to the tax obligation stipulated by the law. Maximum effort is expected from the tax administration to acquire all documents and find out all facts needed for a correct assessment of a tax subject’s tax liability. A tax management is closed by the tax administration by issuing a decision, an individual administrative act, through which the administration imposes an obligation and grants a right, or alternatively declares the existing rights and obligations. This final decision grants applicability to the ne bis in idem principle. It is the so called negative condition of management – an obstacle to a subsequently initiated or already underway management of an already legally effective decision.

As a counterpoint to the authoritative and binding nature of the decision, the Tax Code provides for the rights of the tax subject to legal remedies or to application of supervisory resources ex offo by the tax administration. These are to provide protection from a decision based on incorrect facts or from an unlawful decision. Through these instruments it is possible to re-examine, or oppose to, the decision. In accordance with the legislation currently in force, these instruments are conceived as following:

  1. Legal remedies
    1. proper remedies: appeal, remonstrance – against a decision which is not legally effective; on the initiative of the tax subject,

    2. extraordinary remedies: proposal for an allowance of a renewal of proceedings – used only against a legally effective decision and for reasons of defect in the facts. The application of it is exclusively available to the taxpayer.

  2. Supervisory resources
    1. order of management re-opening: only used against legally effective decisions for reasons of defect in the facts,
    2. order of decision re-examination: the order can be used against a legally not effective decision for reasons of unlawfulness of the original decision, remedy of legal defects.

Among other things, the Tax Code provides for the proceedings of a registration procedure, management of the binding assessment, enforcement proceedings and others. In cases, where the tax administration does not respect the limits of the law and their intense interventions into the sphere of the tax subjects become illegal, the relevant courts are obliged to protect the rights of taxpayers.

Ivan Fučík & Soňa Hanigovská