We would like to bring to your attention that the House of Representatives voted the Special Settlement of Tax Liability Law of 2011. The relevant Law has been published in the Government's Official Gazette on 12 December 2011.
Interpretation of the Law
The Law provides that for all taxes due for the years up to and including 2008, a fixed penalty of 5% will be imposed. Any additional penalties and interest accruing and previ-ously imposed on these outstanding taxes, will be waived under the provisions of the Law.
For the purposes of this Law, the amount of Taxes due shall mean the following:
- Taxes assessed by 30 March 2012 for the years up to and including 2008.
- Taxes which were withheld or should have been withheld at source by 30 March 2012 for the years up to and including 2008.
- Taxes arising in accordance with the tax returns filed for all tax years up to and including 2008 which are submitted by 30 March 2012.
- Taxes imposed by a Court of Law until 30 March 2012 for the years up to and including 2008.
In addition to the above, the Law provides the following:
- No interest or penalties which have already been paid towards the settlement of taxes for the years up to the year 2008 will be refunded.
- In case of settlement of tax liabilities that arise as a result of a tax return that has not yet been assessed by the Director of Inland Revenue, and after the period dur-ing which the Law is in force the Director issues an assessment according to which there is additional tax to be paid, this additional tax will not fall under the provisions of this Law and will be subject to normal interest and penalties.
For example:
On 10 March 2012 a company paid the tax due in accordance with the submit ted Income Tax Return for the tax year 2007 of Euro 10.000. Only the 5% pen- alty will be imposed on the amount of tax outstanding of Euro10.000
On 10 April 2012 the Director of Inland Revenue issues an assessment for the tax year 2007 whereby the company’s tax obligation is Euro12.000.
The additional tax of Euro2.000 that has not been paid up to the date that the Law was in force will be subject to normal interest and penalties.
Entry into force
The above Law will come into force from the date of its publication in the Government's Official Gazette (i.e. 12 December 2011) and will be in effect up to and including 30 March 2012.
This article has been prepared by specialists of ABLV Corporate Services based on mass media publications. Specialists of ABLV Corporate Services provide legal and tax advise, including advise on international tax planning, establishment of holdings, trade, investment, and protection structures, purchase of real estate and other assets, as well as advise on change of residence and acquirement of residence permits. More detailed information on services provided by ABLV Corporate Services can be found at http://www.ablv.com/en/services/advisory