Proposals To Curb VAT Fraud

Measures to curb illegal activity and abuse of the VAT system by businesses are being proposed to take effect from 1 October 2011, with further provisions coming into force on 1 January 2013 and 1 January 2014.

These changes to the Commercial Code are intended to:

• stop illegal practices that distort competition and damage the business climate,
• prevent abuse of the VAT system,
• increase the legislative deterrent for VAT fraud
• improve tax collection and thereby increase the state revenues derived from VAT,
• create a more conducive climate for legal business activity

The first change precludes anyone with tax arrears from setting up a limited liability company. Foreign entities are exempt.