On October 23, 2017, the Codification Commission of the General Tax Law (KKOPP) drafted and proposed a new Tax Ordinance to replace the current Tax Ordinance of August 29, 1997, which had been amended over 100 times since coming into force 20 years ago.
As the justification suggests, the regulations set out in the draft ordinance are intended to serve two basic purposes:
- to protect the taxpayer’s rights in its relations with tax authorities and
- to increase the efficiency and effectiveness of tax collection.
Protecting the taxpayer’s rights in its relations with tax authorities will be implemented by mitigating the excessive tax burdens that are currently imposed on taxpayers. In order to safeguard the taxpayer in his relations with the tax administration, this proposed ordinance introduces provisions such as: general principles of tax law, an enumerated list of taxpayers’ rights and obligations, regulations protecting taxpayers in circumstances where there is compliance with tax authorities’ interpretation and well-established judicial practice, a statute of limitations on tax liability, a prohibition against adjudicating ambiguous provisions against the taxpayer’s interest in the first-stage of proceedings, measures that mitigate the excessive length of proceedings, prohibition against legal overreach, longer deadlines for appeals and complaints, as well as official information on changes in tax law.
The second fundamental objective of the new tax law is to increase the efficiency of tax compliance. Tax laws, including the Tax Ordinance, are intended to ensure that expected tax revenue is realized. This requires the introduction of a number of mechanisms and procedures to increase tax authorities’ capacity to enforce tax laws. This is particularly important in situations where aggressive tax optimization, including cross-border taxation, result in a significant reduction in tax revenue. Increasing tax authorities’ effectiveness cannot, however, lead to violations of taxpayer’s rights. This planned increase in efficiency will be achieved by the following: improving the provisions related to the anti-avoidance clause, imposing a statute of limitations on the assessment and collection of tax liabilities, the possibility of adjudicating overpayments in partial decisions and after the statute of limitations has expired, introducing an effective tax model (simplified procedure, representative procedure, elimination of proceedings concerning immaterial taxable amounts), clarifying the extraordinary methods used for overturning a final decision, introducing a duty of cooperation between the taxpayer and the tax authority, broadening the use of electronic communications, clarifying the conditions for immediate enforceability, clarifying the conditions for imposing sanctions, modifying the rules concerning tax law interpretation.
These planned changes are expected to come into force on January 1, 2019.
