PUBLISHED: 27 August 2019
New Prakas on taxation procedure.
The General Department of Taxation (GDT) issued a new Prakas on taxation procedure. It aims to reduce lack of transparency and forms of inconsistency in taxes collection process, by providing clear guidelines on administration requirements and processing timeframes.
Formerly, companies earning less than 125.000 USD per year from the sale of goods would fall under the estimated tax regime. However, medium to big companies with annual revenues superior to this threshold were able to manipulate the system and pay extremely low amount of taxes. There was no incentive to enter the real tax regime.
On that matter, Prakas 496 aims to provide a more efficient tax regime, however the government still has to work on teaching SMEs to respect their tax obligations.
In concrete terms Prakas 496 aims to exacerbate business and investment. For instance, it will answer foreign investors’ concerns vis-a-vis lack of transparency.
Moreover, foreign national CEOs who reside abroad won’t have to present themselves to the General Department of Taxation (GDT) for the tax registration process.
In other words, the goal is to get a more efficient and consistent tax regime for local and foreign companies.
NB: Prakas 496, is a refined model of Prakas 1139. Prakas 1139 is a previous attempt to improve the efficiency of the tax registration system.