Tax Forms: Why Make Things Simple When You Can Make Them Complicated
Experience shows they might not be.
On 1 January 2013, an amendment to the tax code came into effect, whereby the information required by the tax office will now be specified in the printed or electronic tax form itself, not in the law. Previously, all taxpayer obligations were set out in the tax code; tax forms were available merely to facilitate tax filing.
The Ministry of Finance’s power to issue tax forms is limited only by a general condition that only certain information may be requested, namely that which follows from the basic objectives of tax administration, such as information needed to assess and determine taxes correctly, ensuring tax payments, the procedure avoiding undue delay and cost, cooperation, and the principle of legality.
A precise list of the information that must be included in tax forms has not, however, been defined. According to the explanatory report accompanying the amendment to the tax code, this is due to the rapid development of technologies (remote access to data and registers) and also because additional information was often requested in printed forms even though it was not listed in the relevant legislation.
New tax forms sans law
From 2013 onwards, tax forms may be modified by the Ministry of Finance without the need to change the information set out in the law itself. I would hate to imagine, in this regard, that state officials intend to change various forms, however, particularly given the ever increasing administrative burden of state administration and widespread political pressure aimed at reducing the number of state officials.
Nevertheless, I have certain doubts when it comes to filling in pre-determined boxes in printed forms. Experience shows that additional documents are often required for voluntary VAT registration, such as agreements concluded with business partners on future performance. These documents are requested either on the basis of the tax office’s internal instructions or in order to verify the information in the form. But there is nothing simpler than omitting new obligations from the tax code, slapping them into a box with instructions, and marking everything in the form required information.
I believe that, in order to give taxpayers greater legal certainty, our legislators could certainly have chosen an easier way to make certain information compulsory. Powers could have been expressly granted to the Ministry of Finance in the tax code, and the Ministry could then establish the form.
Most taxpayers no doubt expect to encounter administrative burdens when dealing with state authorities. An honest taxpayer first and foremost wants to run his business and not be tied up in useless bureaucracy. On the other hand, the Ministry of Finance should follow one of the objectives of tax administration, i.e. to act so as to avoid excess cost to the taxpayer. This may lead to simplifying the tax registration or tax return form, which would help create a positive business environment in the Czech Republic.
The tax office has other ways to verify certain facts, tax claims, and other taxpayer duties, such as various procedures explicitly set forth in the tax code. Only time will tell which direction the Ministry of Finance chooses and whether the forms will in fact be simplified.