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Reverse Charge and the Cash Flow of the Public Budgets in the Czech Republic
[Všeobecný přenos daňové povinnosti a cash-flow veřejných rozpočtů České republiky]

Author

Listed:
  • Růžena Kohoutková
  • Hana Zídková

Abstract

Reverse charge is currently used as a measure against VAT carousel fraud. Its extension to all goods and services is discussed among the tax policy makers at the national and EU level. Opponents of general reverse-charge argue that this method of VAT collection would completely change the nature of the VAT system. One of the practical drawbacks of reverse charge is the negative impact on the cash flow of the public budgets. This article quantifies the average monthly financing available to the State thanks to delayed repayments of input tax to VAT payers under the normal VAT system. This amount equals to almost 53 billion CZK and represents the negative impact of the general reverse charge on the cash flow of the public budgets. A change in the deadline for remitting VAT or introducing VAT advances to be paid prior to the final tax payment would reduce the negative influence on public finances.

Suggested Citation

  • Růžena Kohoutková & Hana Zídková, 2015. "Reverse Charge and the Cash Flow of the Public Budgets in the Czech Republic [Všeobecný přenos daňové povinnosti a cash-flow veřejných rozpočtů České republiky]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2015(6), pages 47-61.
    • Handle: RePEc:prg:jnlaop:v:2015:y:2015:i:6:id:491:p:47-61
    DOI: 10.18267/j.aop.491
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    References listed on IDEAS

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    1. European Commission, 2013. "Taxation trends in the European Union: 2013 edition," Taxation trends 2013, Directorate General Taxation and Customs Union, European Commission.
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    More about this item

    Keywords

    Reverse charge mechanism; VAT system; VAT evasion; cash flow impact;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H69 - Public Economics - - National Budget, Deficit, and Debt - - - Other

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