New Definition of Unreliable Person

The status of an unreliable person, newly defined in Section 106aa of the VAT Act, has been added to that of an unreliable payer in the latest VAT Act amendmet, which became effective on 1 July, 2017.

From then on, any physical person or legal entity, not necessarily a VAT payer, that has failed to meet their obligation related to VAT administration may be identi-fied by the VAT administrator as unreliable.

 Furthermore, the amendment aims to prevent busi-nesses from cancelling their VAT registration in order to get rid of the label of an unreliable payer; by doing so, the entity would instantly become an unrelaible person and this status remains valid for any other possible VAT registration cancellation.

Customers are to assume similar responsibilities of ensuring the due VAT is paid when dealing with unreli-able persons as they would do while doing business with unreliable payers.

 A list of unreliable payers is to be published regularly by the tax administrator, who will also decide whether the entities in question are to be removed from it based on the validity of reasons due to which they have been included there after a period of at least 12 months has passed.