Financial Difficulties of NPO and Public Entity Taxpayers

The Tax Administration will examine taxpayer cases individually, analyzing and including every influencing factor, the history of the NPO or Public Entity taxpayer, and providing a detailed review for each type of unpaid tax.

When financial circumstances prevent an entity from paying tax liabilities on time, it may be permitted to enter into an installment payment agreement at any time.

Simultaneously, the taxpayer must prove that they are in a state of financial inability to pay the tax liability in full and demonstrate that, despite the financial circumstances, they are able to fulfill the agreement.

The tax administration cannot enter into an installment payment agreement if the auction procedure for the sale of confiscated assets for that outstanding tax liability has already commenced.

• The request must be made in writing and addressed to the director of the regional directorate or the head of a similar unit in the regional directorate where the taxpayer is registered.
• The request must be made within 15 days from the date the assessment notice is considered received. The installment payment agreement is made in writing, within 10 calendar days from the date of submission of the request, and is signed by the taxpayer and the director of the regional directorate or the head of a similar unit.
• To sign an installment payment agreement, the taxpayer is obliged to immediately pay at least twenty % of the value of the liability for which the agreement is concluded.

The installment payment agreement is concluded for a period starting from the date of signing until the end of the next calendar year following the moment of the drafting of the agreement.

Upon signing an installment payment agreement for a tax liability, late payment interest continues to be paid for the tax liability, but no late payment penalty is calculated.

Once the taxable person presents the document of this guarantee, the director of the regional tax directorate may agree to sign the installment payment agreement for the unpaid tax liabilities.

The guarantee must be provided by one of the banks, of which the taxable person requesting the installment payment is a client. In this case, the bank issuing the guarantee becomes the guarantor for the liability of the taxable person.
The director of the regional tax directorate, when the request of the taxable person is unsubstantiated and unjustified by the circumstances, may reject the request for an installment payment agreement or may require a bank guarantee before entering into such an agreement.

The installment payment agreement may be terminated by the Tax Administration at the earliest moment that the taxable person does not comply with it regarding the regularity of payments, as well as when they do not pay other tax liabilities that arise during the period covered by the agreement.

In this case, the taxable person is obliged to pay all unpaid tax liabilities covered by this agreement within 30 calendar days from the date of the decision to terminate the agreement. If these liabilities are not paid, the Tax Administration collects the liabilities in accordance with the legal provisions.

Source: General Directorate of Taxes.