Charging VAT in times of war against Covid-19

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Without asking permission and without any regard for human life, COVID-19 is impacting the social, economic, cultural and religious life of entire communities, from small villages, towns and cities, to entire countries and continents. In Portugal, the fight against this pandemic is being waged on several fronts and in a herculean manner by soldiers who do not always have the experience and resources necessary to face the might of the enemy.

In the front lines of the economic battle, all the affected countries are struggling with a dilemma regarding how to raise revenue so that states can meet their obligations. The legislative torrent has begun to flow and we do not know when it will be possible to stop.

Extension of deadlines for filing certain taxes

In the Portuguese case, the first measures to support the economy emerged kenya whatsapp number database Dispatch No. 104/2020.XXII , of March 9, 2020, by the State Secretariat for Tax Affairs (SEAF), which eased the deadlines for submitting some taxes, namely:

- Special payment on account - the special payment on account, to be made in March, can now be made until June 30, 2020, without any additional charges or penalties.

- Periodic Income Declaration (Model 22) - the submission of the Periodic Income Declaration (Model 22), relating to the 2019 tax period, can be completed until July 31, 2020, also without any increases or penalties.

- Just impediment - the application of the just impediment figure was extended to situations in which taxpayers or certified accountants are in a period of prophylactic isolation or are carriers of a disease caused by COVID-19, for which a declaration from the health authorities is required.

The principle of mutual collaboration

And since weapons are not cleaned in times of war, while the famous pandemic curve showed the alarming growth in the number of infected, dead and suspected cases, Portuguese fiscal policy strategists published a new dispatch.

Order No. 129/2020-XXII , of March 27, from SEAF, was created with the purpose of helping to mitigate the effects of the COVID-19 pandemic , rooted in the principle of mutual collaboration between the tax administration and taxpayers, as well as in mechanisms facilitating the voluntary fulfillment of obligations.

From the outset, it was determined that the concept of just impediment would be extended to situations involving the establishment of a sanitary fence that prohibits taxpayers or certified accountants from traveling to and from areas covered by the fence, provided that they have their tax or professional domicile in said areas.

But, in my opinion, the truly disruptive measure has to do with the possibility of calculating Value Added Tax (VAT) , for the period of February 2020, based on e-Invoice data, without the need for supporting documentation, namely reconciliations and physical documents.

We all know that until this order, the calculation of VAT was based on physical supporting documents and lacked the rigor of formal validation of these documents, in order to arrive at the amount of VAT to be delivered to the State.

Replacement declarations, without additions or penalties
The same order also clarifies that, if necessary, companies may submit replacement declarations, without any additional charges or penalties, as long as this replacement and respective payment/settlement occurs during the month of July 2020.

To make this possible, the State Secretariat for Tax Affairs has defined that it will only apply to the following cases:

1. The taxable person has a turnover , in relation to 2019, of up to €10,000,000 ;
2. The taxable person started its activity on or after January 2020 ;
3. When the taxable person restarted the activity on or after 1 January 2020 and did not obtain a turnover in 2019 exceeding €10,000,000 .

PDF invoice valid as an electronic invoice
This latest order also defines that, for the months of April, May and June, PDF invoices may be accepted as valid, and will be considered electronic invoices for all purposes provided for in tax legislation.

This is a small help, not a real solution.

Although I can admit the justice of the measure that will punctually make the trench less muddy, allowing us to avoid contact between certified accountants and clients for the delivery of documentation that supports the accounting and, at the same time, the calculation of VAT; what I do not understand is why this measure was not extended, from the outset, at least until the end of June, with the possibility of rectifying the declarations, through the submission of replacement declarations, until the end of this year.

I believe that extending this measure until June 2020 would boost the morale of these soldiers, that is, certified accountants, who are so overwhelmed in their daily personal and professional struggle to avoid falling into the hands of this global pandemic.