Contacts
BDO Hungary
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1103 Budapest
Kőér street 2/A
Laurus offices,
Phone: +36-1-235-3010
Fax: +36-1-266-6438
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Focus of the tax audit in 2016 – increasing number of VAT inspections
The Hungarian Tax Authority recently published its Annual Policy on Tax Audits, which includes the trends and focuses of tax audits for 2016.
The Tax Authority auditors will continue to pay special attention to compliance with the obligations of the EKAER system (Electronic System for Controlling the Road Transport of Goods) and to electronic invoicing and online cash registers. Among the main business operations that are expected to be audited are online trading and online services, web hosting, taxpayers operating in the sharing economy (passenger transport and hotel services), and the wholesale of computers, software, electronic and telecommunications equipment.
Priority attention will also be paid to chain transactions. In Hungary, the supply and acquisition of services and goods within the EU must be reported under the VAT Information Exchange System (VIES). Furthermore, along the lines of VIES, from 2013 domestic transactions that exceed a certain threshold must be reported using a Domestic Sales and Purchase Listing report. The Tax Authority cross-checks the reported data and initiates an audit if it detects differences.
An increasing number of VAT audits are expected to be launched by the tax authority before it will pay a VAT refund and also after VAT returns are submitted. The auditors apply strict requirements on foreign companies. In the course of a VAT audit, the whole business structure is audited, with the auditors requesting contracts, invoices, and transportation documents. The whole process – from the ordering to the invoicing – is audited to verify compliance.
A standard focal point of such audits is an examination of whether the conditions of the VAT exemption exist in cases involving the intra-community supply of goods and exportation of goods to a third country. According to a Ruling of the Hungarian tax authority for intra-community supplies of goods, the prime evidence they are looking for to determine authentic certification of delivery is a fully signed CMR document (the signature and stamp of the recipient are necessary on the CMR , otherwise the tax office requires a separate customer declaration). If the conditions of the tax exemption are not fully supported with the proper documents, the tax authority has the right to reclassify the transaction as a domestic supply of goods and to levy the appropriate tax and related sanctions.
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