The regulation of deadlines for filing tax returns in the case of company transformations where the decisive date of a transformation is not the first day of the calendar or fiscal year has been amended many times in the Income Tax Act. Before 14 July, 2011, the deadline for filing a tax return was the end of the month following the month in which the general meeting approved the transformation. The amendment in effect from 15 July, 2011 adjusted this deadline by extending it to three months, to converge with the standard deadline for filing tax returns. The Amendment to the Transformation Act in effect since 1 January, 2012, which also includes an amendment to the Income Tax Act, adjusts the deadline back to a one-month period, although it is likely that this may be a legislative error.
As a result, the application of deadlines in practice is uncertain, especially as there are no transitional provisions. The Chamber of Tax Advisors plans to raise this issue at the next meeting of the Coordination Committee.
Tax write-off of receivables has also been subject to many significant changes over the years. Until the end of 2010, tax write-off of receivables was conditional on whether it was possible to create tax adjustments to receivables in accordance with the Act on Reserves. From 2011, tax write-off of receivables was allowed even where receivables were not covered by tax adjustments (e.g. statute barred receivables) but only where other conditions had been met. The Amendment to the Transformation Act effective from 2012 restores in the Income Tax Act the condition applicable in 2010 stipulating that a write-off of a receivable can be claimed as tax deductible only where a tax adjustment to such receivable has been established in accordance with the Act on Reserves. There are certain exceptions to this, such as receivables less than six months overdue and receivables with a nominal value exceeding CZK 200,000 that have not been subject to any arbitration, court or administrative proceedings. The condition requiring the creation of tax adjustments need not apply in these cases. These receivables can be written-off for tax purposes if one of the other conditions determined in the Income Tax Act is met.
Martin Houska, mhouska@kpmg.cz, tel.: +420 222 123 843
Jana Šandová, jsandova@kpmg.cz, tel.: +420 222 123 740
Source: KPMG Česká republika, s.r.o.; Financial Update, January 2012
