Scholarly record
HARMONIZATION OF VALUE ADDED TAX APPLICABLE IN THE SLOVAK REPUBLIC IN EUROPEAN UNION LEGISLATION
Abstract
The tax harmonization process in the EU is part of global trends, namely tax adaptation, cooperation, coordination and harmonization versus competition. Unlike other areas, for example business, there is no institution representing all countries in the field of tax coordination. So the tax harmonization process is demanding and depends on the decision of the countries. The aim of this paper is to analyse the process of harmonizing value added tax (VAT) in the European Union (EU), one of the prerequisites for the successful establishment and functioning of the EU single market. The harmonization process in the Slovak Republic is analysed separately. To fulfil the goal, general scientific methods, an analysis of the harmonization process, comparison and synthesis were used. Despite many problems, the harmonization of indirect taxes in the EU has been much more successful compared to the harmonization of direct taxes and VAT is mandatory in all EU member states. Since no single EU VAT tax rate applies, one single taxation principle cannot be applied the principle of destination. For this reason, a combination of two principles is applied: the origin and destination principles. On the other hand, the biggest problem with VAT is the abuse of VAT in large-scale tax evasion by creating fictitious companies that artificially produce excessive deduction. This leads to tax evasion and consequently to a reduction in government revenue to member countries. This also has a negative impact on VAT legislation, which is too complex to eliminate tax evasion.
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References12
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Act No. 222/1992 Coll. on Value Added Tax, as amended by later regulations
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