Forthcoming draft amendment to the Value Added Tax Act

The Ministry of Finance of the Slovak Republic has published preliminary information on the forthcoming draft amendment to Act No. 222/2004 Coll., on Value Added Tax (hereinafter referred to as the “VAT Act”), which aims at making the fight against tax evasion more effective and eliminating legislative loopholes that enable harmful tax practices. To this end, the amendment to the VAT Act is intended to introduce new measures in the area of the right to deduct VAT, the aim of which is to ensure the accuracy of the VAT deducted on goods and services and thus also the tax burden neutrality.

The amendments and supplements to the VAT Act will in particular extend the cases to which the obligation to correct the deducted VAT will apply, clarify the definition of the term “investment property” and modify the rules in the area of adjustment of the deducted VAT on investment property.

The current legislation does not take into account all cases of economic practice in connection with the adjustment of the deducted VAT, and therefore the Government of the Slovak Republic expects the proposed amendment will reduce the amount of tax evasion and thus reduce the VAT gap.