The VAT trap

The government has figured out that VAT is the best source of new tax revenue. It already raised the VAT rate on many services, and increases on diapers and restaurant meals are planned for May. In most cases, the government is blaming the higher tax on the EU, but it's clear that the finance ministry didn't do all it could to avoid the increases. The media have suggested that this was intentional, because it needs the money. The next unpleasant surprise is the VAT prepayment in April. According to Tomáš Rodák of PwC, companies must pay an EU-transition deposit of 50% of their March VAT liability. Even if a company is owed a refund, he said, a prepayment will be due. Few companies know this, and many won't have the money. The question arises whether the finance ministry is secretly counting on all the fines it'll be able to impose for noncompliance. PricewaterhouseCoopers