VAT INCREASE AND RELATED CHANGES

(Act No. 255/2003 Coll., amending and supplementing the Act No. 289/1995 Coll. on Value Added Tax, as amended)

The main and most significant change brought by this amendment to the VAT Act is the introduction of a single rate of the value-added tax in the amount of 19%. The previous basic VAT rate shall be decreased from 20% to 19%. At the same time, the previously valid reduced rate of 14% shall be repealed and the goods and services subject to this reduced VAT rate shall fall under the rate of 19%.

In other provisions, an issue of excessive tax deduction is newly regulated. In case of excessive deduction, the payer shall deduct the excessive deduction from his/her tax liability in the following taxation period. If such deduction cannot be done, the tax authority shall return the excessive deduction on the basis of a payer's application.

In provisions on exemption of lotteries and other similar games from tax, this exemption shall be also extended by the arrangement of operation of lotteries and other similar games on behalf and on account of a person having a licence according to the Act on Lotteries. This exemption shall also apply to mandataries accepting bets, selling lots, or paying out the prizes/winnings.

Transitory provisions included in the act impose on tax authorities a duty to issue new certificates on registration of VAT payer, no later than on the effective date of the Agreement on Accession of the Slovak Republic to the European Union.

This act became effective on 1 August 2003, however most provisions mentioned in this article shall come into force on 1 January 2004.