Abstract:Within the Member States of the European Union, value added tax (VAT) is the most harmonized form of tax from all types of direct and indirect taxes. It does not affect the costs or the revenues of the company, but it affects taxpayers on the other hand. The impact on the company's cash flows is most significantly affected. The basic principle of VAT taxation consists of the following idea. The Member State of final consumption of the goods or services is the state to whom the VAT finally belongs to. The free movement of goods and services between the Member States resulted in many new traffic companies being created. The measure of VAT influence on Cash Flows depends mainly on two impact factors. The first is the length of excessive deduction payment period to taxpayer bank account. The second impact factor is the amount of excessive deduction expressed through money. The objective of this study is an evaluation and quantification of the impact of value added tax on the road traffic companies' cash flows. The financial burden of traffic companies had an upward trend only during the first and second year of the analyzed period. Since 2006, the financial burden had a downward trend. This decrease was more significant until 2009 (the end of the financial crisis in European countries). After this year, the declining rate had moderated. This development results not only from declining interest rates of the European Central Bank but also from economic growth and development in European countries. JEL Classification IntroductionThe objective of this study is an evaluation and quantification of the impact of value added tax on road traffic companies' cash flows. This research also focuses on the comparison of this impact on three different sets of traffic companies. The criteria for creation these three sets were three basic value added tax (VAT) schemes. The first scheme is supply of goods and services at Slovak territory. The second one is the acquisition of goods in the territory of the country from another member state. The third schema is the importation of goods. The time period of 2005-2015 is analyzed in this study. The impact of the value added tax is quantified by financial expense interests. These expenses depend on the period of time limits for the excess deduction and also on the excess deduction. The authors have chosen three basic indicators: indicator: "value of money I," indicator: "value of money II" and financial burden (base index). The analysis presented in this study confirms the time period between the day of VAT tax return submission to the Financial Directorate by electronic means (this is the day of taxpayer's entitlement to excessive deduction) and between the validity day (the day when the taxpayer receives payment to his bank account from the Financial directorate) as the cause of VAT financial burden. The study is organized as follows. First, the background of the VAT system in the Slovak Republic is presented, this is followed by the literature review, and finally by the theoret...
Private entrepreneurs have an important role in national economies worldwide. Most of them operate and assume legal obligations as private persons. Consequently, they are taxed pursuant to the legal regulations pertaining to personal income taxation in the respective countries. Incomes tax from individual activities is a substantial source of proceeds for national budgets. When taxes are imposed on the individual activities of private persons, they act as both taxable entities and taxpayers at the same time. They are obliged to account for the payable amount of taxes with the state, and present all the associated, necessary records. Therefore, the persons in question are to shoulder considerable administrative burdens. This aspect surfaces in increasing costs, because in most cases they have to rely on external, professional services. Countries aim at shaping taxation environments that encourage taxable persons to account for and state their own taxes. In pursuing this goal, most states have adopted several methods that allow the simpler quantification of the amounts of taxes beyond the scope of complicated accounting systems. This paper has set the objective to look into these methods in Hungary and the Slovak Republic. JEL Classification Numbers: H24, H25,
In 2013, the Slovak Parliament adopted the Law on Amendments to the Law on Income Tax. One of the most significant changes was the introduction of the Tax License of a Legal Entity. On January 1 st , 2018, a minimum corporate tax (the so-called tax license), which was introduced in 2014, was abolished. The main aim of this paper is the evaluation and quantification of the impact which the minimum corporate tax has on the amount of tax liability of a selected group of legal entities in the agricultural sector. The research had tried to find an answer if the tax license abolishment was more in the political interests or if it had some economic background. The main research questions are how has the corporate tax duty increased in the agricultural sector in the Slovak Republic after introducing the minimum corporate tax and how has the tax burden for agricultural holdings increased after introducing the tax license. The analysis presented in this paper confirms that the instrument of introducing the minimum tax is for loss-making sectors, such as the agricultural sector, undoubtedly unfair. On the other hand, the study has confirmed that the public which regularly pays the taxes, agrees with its introduction. JEL Classification Numbers: H25,
In 2015, the Slovak Parliament adopted the Law on Amendments to the Law on Value-Added Tax. This law came into force on January 1, 2016. One of the most significant changes was the introduction of a reverse-charge for the provision of construction works. A government statement of its positive influence on the business environment is inconsistent with the two-year experience in the building sector. The main goal of this paper is to establish the reason for the practical effects of the value-added tax reverse-charge mechanism on the construction companies. The hypothesis is that the negative effect on the cash flows of the construction companies increases ‘opportunity costs’ connected to excessive deductions. The paper focuses on evaluating and quantifying such an effect. It presents a comparison of the conditions before and after the adoption of the Act. No. 222/2004 Coll., as amended in 2016 and includes factors that influence costs and cash flows of construction companies. It but does not consider factors related to turnover and the economic situation. The reverse-charge mechanism affects the total of tax owing, the total deductible tax, the total excessive deduction, and the construction companies’ cash flows. In this study, the data from the information system of the Slovak Republic, under the condition of anonymity, are analyzed for the period 2014–2017. The effect of the value-added tax is quantified by way of financial interest expenses. These expenses depend on time limits for the excessive deduction, total of tax owing, and on the excessive deduction amount. Indicators of ‘Financial Burden 1’ and ‘Financial Burden 2’ are calculated. The results show that the Law on Amendments of Value Added Tax has significantly affected the constructions companies since January 2016. The reverse-charge system has not changed the delay in excessive deduction payments to the taxpayer’s bank account. It has changed the amount of excessive deduction expressed through money and the total tax owing. Based on the study results, this change markedly affects the financial burden of construction companies and provides an ‘opportunity cost’ Value Added Tax payers‘ construction company.
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