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New Era of Tax Inspections

New Era of Tax Inspections

Hungary
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The National Tax and Customs Administration (“Authority”) has presented its vision for the future at a taxation conference held at the end of November 2019. The Authority has outlined that the emphasis will continuously be on the tax inspection of companies alongside with seizing the benefits of digitalisation and development. The principal objective of the Authority is to promote and enforce compliance with legal obligations. This objective will be supported by a new obligation (applicable as of July 2020) that requires taxpayers to provide complete data on their invoices.

At the conference the Authority has mentioned several changes and new objectives concerning their procedures and the role of the Authority (e.g. electronic invoice submission, new data provision obligation, new types of tax inspections and new functions of the Authority). Electronic invoice submission will be mandatory not only for invoices exceeding HUF 100,000 (including VAT), but also for any other invoices as of 1 July 2020. This change means that the Authority will have information on all of the economic (invoicing) relationships between taxpayers.

In line with the guidelines of the OECD, by using Standard Audit File - Tax (SAF-T) (which is an international standard for electronic exchange of reliable accounting data from organizations to a national tax authority), tax authorities will be able to inspect thoroughly transactions between companies in the future. 

The Authority has also announced that in the future it plans to provide new services, including ”communication functions” (i.e. drawing the taxpayers’ attention to more favourable taxation options in its information letters), provision of a new free invoicing interface (available at https://onlineszamla.nav.gov.hu/home) or the operation of a chatbot that will be able to answer taxation related questions automatically. 

Based on the above, the role of the Authority itself (as a service provider) are facing major changes. The new data provision obligation on invoices and the application of Standard Audit File - Tax (SAF-T) will reform the inspection practices of the tax authority, which may mean that all of the taxpayers will be audited by the Authority annually.

By Gabriella Galik, Partner, KCG Partners Law Firm

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