Among the special taxation regimes, the status of small business is one of those for which relatively light tax obligations and simplified administration measures have been deliberately developed by the legislator.
Publicly published statistics by the Revenue Service reveal that small business tax benefits are the reason for the growing interest of individuals and legal entities regarding the status of a special taxation regime and receiving services from them, and this trend is expected to continue in the future.
It should be noted here that preferential conditions in the tax legislation are always accompanied by relevant tax risks, which causes the interest of the tax authority to assess such risks in order to avoid misinterpretation and/or use of the benefit.
The activities of entrepreneurs with the status of a small business, as well as persons in relations with them, are mainly exposed to the following risks:
In the direction of identifying the type of labor relationship arising between the work orderer and the work executor (small entrepreneur) and the relevant tax obligations.
Since the tax legislation provides for the emergence of different tax obligations in the cases of work for hire and the provision of services, it is important to correctly determine the type of relationship between the work orderer and the executor. One of the bases for classifying such relationships as work for hire or providing services for the Revenue Service is the questionnaire posted on their website. In the said questionnaire, the interest of the paying authority is expressed in different directions, for example – does the natural person performing the work offer similar services to other persons through a public offer, did he perform the same activity – as a hired person, or does the income received from the work orderer constitute the income received from his work 85% or more of annual income and more.
Thus, for the correct determination of tax obligations, it is important for the employer/contractor to correctly determine the form and content of such a relationship when starting an employment relationship with individuals with the status of a small business.
Tax risks arising from preferential accounting principles.
Analyzing the restrictions and additional benefits defined by the tax legislation, we can conclude that the principles of accounting of income and expenses differ for an entrepreneur with the status of VAT payer and non-payer of small business.
In particular, the object of taxation of an entrepreneur natural person with the status of non-VAT payer is the taxable turnover, which is documented by the checks of the cash register, and this is the only mandatory form of accounting of his income. The obligation to account for the balance of commodity-material values will arise only when the obligation to register as a VAT payer occurs. Based on the above, we can conclude that the inventory of a non-VAT-paying small entrepreneur should be carried out in order to identify possible uncountable commodity values (inventories) and not their deficit.
As for the record of the obligation to describe the balance of goods and material stocks available at the time of the obligation to register as a VAT payer, the legislator indicates that in such a case, the correctness of the accounting of balances is mandatory for determining the object of taxation of a small entrepreneur, which in turn – the correct determination of the cost values of products during purchase and sale. includes.
Since the difference between the accounting principles depends on the registration as a VAT payer, we can assume that the tax authority will pay more attention to the current control procedures with non-VAT paying small businesses in order to reduce the risk of small businesses hiding their taxable income.
