On 29 January 2020, three decrees were published in the Official Gazette for introducing a new tax code, amending the VAT Law and customs Law. It was approved by the Constituent Assembly on the similar day.
Withholding taxes due
One of three decrees introduced new tax code effects as from 28 February 2020 and provides for some significant tax changes. Under the new tax code, the validity for tax exemptions will be reduced from 5 years to 1 year. But exception is civil organizations relating to religion and worship will be able to get benefit from exemptions for an indefinite term.
Failure to withholding tax payment before the due dates are subject to penalties of (i) 5% of the taxes withheld for each day of delay, up to a maximum of 100 days; (ii) 1000% of the taxes withheld if the delay exceeds 100 days; and (iii) 1000% of the taxes withheld if the taxpayer is subject to an audit, regardless of whether or not the delay is 100 days and without prejudice to potential imprisonment sanctions ranging from 4 to 6 years. The General Attorneys’ Office has the authority to grant for initiating criminal proceedings relating to tax crimes.
Amendments in VAT Law
The Decree amended the VAT Law effects as from 28 February 2020. In accordance with the decree, a surcharge ranging from 5% to 25% applies to the payment of goods and services in foreign currencies or in cryptocurrencies different from those backed by the government. The additional tax rate will be set by the National Executive Power.
