Law on Taxes and Duties amended to decrease tax penalties

On 26 October 2006, the Parliament approved a number of amendments to the law on Taxes and Duties, the most essential of which are liberalization of the tax penalty provisions and changes in the rules concerning cash payments. The amendments will enter into force as of 1 January 2007.

The current provisions, under which the tax payer was subject to a tax penalty of 100% of the unpaid tax, have been replaced with a scale of penalties under which the amount of penalty depends on the materiality of the unpaid tax. Materiality is measured as a percentage of the unpaid tax against the total declared tax liability. When the unpaid tax is less than 15% of the declared tax liability, the tax penalty has been decreased to 30% of the unpaid amount. A penalty equal to 50% of the unpaid tax will be payable if the unpaid tax exceeds 15% of the declared tax liability, while a penalty equal to 100% of the amount of the unpaid tax will be applied if the tax avoidance has been committed repeatedly,