VAT cash flow advantages
available due to the new tax account system
21 April 2009
Effective
as of January 1, 2010, the reporting and paying of value added tax in Finland
will change due to the implementation of the new tax account regime proposed by
the Finnish Government. The amendment needs still to be passed by Parliament.
Involving
several amendments to the Finnish tax legislation the new system, in addition
to the value added tax, will at first cover most of the other unprompted taxes
i.e. withholding tax. Later it will be extended to cover all the taxes levied
by the Finnish tax authorities.
Due to the
amendments, the Finnish tax authorities will begin, as of January 1, 2010, to
keep a taxpayer specific account of taxes subject to the new regime. The tax
account will include data of all entries on the account, balance of that
account, unsettled taxes and unused payments. A statement of that account will
be issued by the tax office to the taxpayer on a monthly basis. Future
amendments to the tax account system will bring to the taxpayer a possibility
to access the data on the tax account also by internet.
All taxes
subject to the new regime must be reported and paid by the new unified
statutory deadline. In respect of VAT, the reporting and payment due dates will
move forward by three days from their current closing date.
Not only
will the date of reporting and payment be unified. All the taxes subject to the
new regime are paid by a single payment. Thus, instead of making separate
payments for value added tax and e.g. withholding tax one makes a single
payment that covers payments to all taxes subject to the new regime.
Penalty
regime applicable to late payments will change as well. Currently different
penalty rules apply across most of the unprompted taxes. These rules will be
unified, which should make it easier for the taxpayer to estimate their costs
which will result from late payment.
Foremost
the new regime will alter the procedures relating to the VAT refunds. In view
of the single payment of all taxes subject to the new regime, the negative
monthly VAT will now be offset against other payable taxes included in that
payment. If the negative VAT can not be totally offset, the excess is refunded
to the taxpayer each month. This will be contrary to the current situation
where, as a main rule, the negative VAT must be carried forward to the next
month during the financial year. The new regime should thus hasten the recovery
of negative VAT and should also abolish the need for separate VAT refund applications.
Introduced
simultaneously to the VAT Package the new tax account regime may entail some
further challenges to the financial management of the companies. On the whole
these changes, however, generally avail the taxpayer, given above all the
benefits in recovery of negative VAT.
Further information:
Jukka-Pekka Kankaanpää
Tel. 020 760 3527
e-mail: firstname.lastname@kpmg.fi