The advertisement tax regulation entered into force in 2014, but still many enterprises are not aware that their activity may be subject to this tax.
Several forms of advertisement is regarded as taxable activity, and – if certain conditions are met – ordering the publication of advertisement, as well.
The complexity of the legislation arises from the fact that different rules should be applied for the tax point, reporting obligation, tax base and tax rate in the case of publication or order of publication of the advertisement.
The following risks and interpretation issues may arise in relation to advertisement tax:
- The complexity of the advertisement tax regulation may trigger significant administrative burden for companies concerned (issuing and purchasing declaration; preparing sufficient documentations).
- In many cases it is difficult to decide whether or not a publication of advertisement has been carried out only for (tax exempt) identification purposes or for (taxable) promotion purposes.
- As of 1 January 2017, the Tax Authority is entitled to levy a significant penalty in the event of failing to register for and declare the obligation.
- Review and comment on sponsorship, marketing and other advertising contracts and related transactions, advertising activities from an advertisement tax perspective;
- Review of the practice applied in connection with ordering the publication of advertisements;
- Interpretation of the underlying legislation to clarify legislative uncertainties;
- Preparation and submission of guideline requests to the Ministry for National Economy or the Tax Authority; related liaison with the representatives of the authorities;
- Process review of fulfilling advertisement tax liabilities; related advisory services.
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