Slovak Financial Law News 2004

New Act on Alcohol Excise Tax

Act No. 105/2004 Coll. on Excise Tax on Alcohol and amending and supplementing the Act No. 467/2002 Coll. on Production and Placement of Alcohol on the Market as amended by the Act No. 211/2003 Coll.

The new Act on Excise Tax on Alcohol (the ``Act'') repeals and supersedes the previously valid Act No. 229/1995 Coll. on Excise Tax on Alcohol, as amended, as well as related implementary regulations issued by the Ministry of Finance of the Slovak Republic and the Ministry of Agriculture of the Slovak Republic.

The purpose of a new concept of the Act is especially to implement provisions of the principal Directive 92/12/EEC on the general arrangements for products subject to excise duty and on the holding, movement and monitoring of such products, which is reflected by the introduction of a mechanism for the operation of tax warehouses, authorized recipients and related tax suspension and quarantee of tax payment, in the monitoring system of movement of the products through circulation of an accompanying document, consistent keeping of registers which enable supervision over production, import, export, movement and consumption of alcohol, with the aim to minimalise possible tax avoidance.

The Act regulates the taxation of alcohol which is subject to excise tax within the tax territory which is considered to be the territory of the Slovak Republic. The subject of tax is alcohol produced in the Slovak Republic, supplied to the tax territory from any other Member State of the European Union, or imported into the Slovak Republic from a third country. Section 4 of the Act stipulates a list of substances which are deemed to be alcohol for the purposes of this Act.

Tax administration is carried out by the customs office. Territorial jurisdiction of the customs office shall be governed by the registered office in case of a legal entity, or the permanent residence in case of a natural person.

The tax base is the quantity of alcohol expressed in hectolitres of absolute alcohol (``hl a.'') at a temperature of 20^C. The tax shall be calculated as a multiplication of the tax base and particular tax rate. As for the tax rates, these are as follows: (a) basic tax rate shall be SKK 25,000/hl a., and (b) reduced tax rate shall be SKK 12,500/ hl a.

The reduced tax rate shall apply to alcohol produced in a distillery for home distillation of fruit to the maximum quantity of 30 litres of alcohol from produced spirit per one farmer and his/her household per one production period under the conditions of this Act.

Unless the Act stipulates otherwise, the tax duty arises by release of the alcohol for tax free circulation.

The taxation period is essentially one calendar month. The Act also regulates a time period for filing a tax return and the tax maturity.

The Act further regulates conditions for exemption of alcohol from tax, tax refund, issues related to denaturation of alcohol, marking of a consumer package of alcohol by a control stamp, home distillation of fruit and it also defines several important terms, such as an enterprise for alcohol production, tax warehouse, alcohol warehouse, authorized recipient and tax representative.

The Act also regulates in detail the issues related to the transfer, import and export of alcohol as well as the issue of alcohol forwarding business.

The customs office may impose a penalty on a legal entity or natural person for breach of its duties in the disposal of alcohol up to SKK 1,000,000, or a penalty up to the amount of tax pertaining to the quantity of dispatched alcohol.

This Act came into force on 1 March 2004, save for certain provisions which became effective on 1 May 2004.

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