Taxation Act

P.R.O. LAW CONSOLIDATION
Law Status:	In-Force
Last Consolidated:	2017-12-22

Whereas for the good and viable government of the Kingdom it is judged right and proper that government revenue by taxation should be enacted and regulated by law,

Be it decreed by His Royal Majesty, King August Charles II, by and with the advice and consent of the Government and Peoples of Gotzborg, in this Chamber of Deputies here assembled, and by the authority of the same, as follows:

Preliminary

Short Title

1. This Act may be cited as the Taxation Act.

Repeals

2. The Economic Foundation Act 2004, to the extent that it is repugnant to this law, is repealed to that extent.

Commencement

3. This Act shall commence on a date to be fixed by Royal Decree.

4. Specific taxes enacted herein shall commence on the date or dates respectively provided.

Legislative Purpose and Organisation

5. This law establishes the powers and prerogatives of the Royal Government in respect of taxation, and the duties and obligations of certain persons and entities in the Kingdom in respect of taxation. This is the general purpose of this law.

6. Part II (Taxation Generally) of this law enacts the technical and procedural matters of liability, assessment, payment and administration of taxation. All other Parts of this law are subject to Part II.

7. Part III (Penalties) of this law enacts enforcement and penalty provisions in respect of taxation and taxation administration. All other Parts of this law are subject to Part III.

8. Part IV (Receipt Tax) and subsequent parts of this law enact specific taxes.

Definitions and Interpretation

9. The Royal Chancellor may delegate the various powers, duties and responsibilities of this Act in such manner as he deems fit. Subject to such delegation, in this Act and any related regulation, decree, order or instrument of the Kingdom a reference to a person or organisation shall be taken as a reference to the person or the organisation delegated by the Royal Chancellor for the referred matter; and if no such delegation has been made, the reference shall be taken as a reference to the Director of Finance.

10. In this Act and any related regulation, decree, order or instrument - :

1. “the authority” means the delegated authority responsible for administration of the matter referenced;
2. "entity" means a natural person or an entity as defined by the Business and Corporation Registration Act;
3. "pay tax" means and infers payment of tax to the Royal Government;
4. "quarter" means a period of three calendar months ending on 31 March, 30 June, 30 September or 31 December.

Taxation Generally

Liability to Pay Tax

11. Subject to specific definitions, interpretations and the application of other laws, it is the general law of the Kingdom that an entity is liable to pay tax if a provision of this law which imposes a tax liability can be applied to that entity.

12. Notwithstanding anything else in this or any other law, it is the general law of the Kingdom that the Royal Government is not liable to pay tax to itself, and that this provision extends to any agency or subsidiary operating unit of any department of the Royal Government.

13. Notwithstanding anything else in this or any other law, it is the general law of the Kingdom that His Royal Majesty is not liable to pay tax.

Self-assessment

14. Every entity that is or becomes liable to pay tax is entitled to self-assess its liability.

15. Self-assessment of tax liabilities shall be assisted and enabled by the Directorate of Finance, which may determine the methods and procedures of self-assessment and publish directives and user-guides in relation thereto.

16. The right to self-assess does not infer an obligation to self-assess. An entity may engage assistance for its assessment.

17. Whether an entity self-assesses or is aided by a third party to assess, the entity retains primary responsibility for lodgement and payment.

Lodgement and Payment

18. Subject to the procedures peculiar to any tax, an entity which has self-assessed its liability is obligated to make a lodgement and payment within the time frame applicable to that tax.

19. An authority delegated for the purpose shall have responsibility for receiving lodgements. That authority may direct the form in which a lodgement is to be made.

20. The privacy and confidentiality of an entity's lodgement must be protected and respected by the authority and by any official who is privy thereto.

21. Payment is due, for the amount of tax liability declared in the lodgement, seven (7) days after acknowledgement of receipt of a valid lodgement by the authority.

22. Where the authority deems a lodgment to be invalid, for any reason, it shall return the lodgement to the entity with instructions for rectification; and the entity shall make its corrected lodgement within seven (7) days.

23. Payment of tax shall be made by an entity to the account of the Royal Government in accordance with procedures and the time frame applicable to that tax.

24. It is lawful for an entity to pay more tax than their liability, and to account that overpayment as a credit in its favour against a future assessment and lodgement.

Investigation

25. The Directorate of Finance may, at its discretion, undertake an investigation of any lodgement.

26. It is the obligation of every person and entity in the Kingdom to fully cooperate with an investigation undertaken under A above.

27. An entity shall retain its primary source financial records, its self-assessment or other assessment materials, and copies of its lodgements, for a period of not less than seven (7) years.

28. An entity which ceases to exist must, if possible, sequester its retained records as required by C above in the safe custody of a suitably qualified records management service or, in lieu thereof, the safe custody of the Directorate of Finance.

29. The Directorate of Finance shall have the power to order an entity to pay additional tax if the investigation shows errors in the assessment relevant to that lodgement. See also below in respect of penalty provisions.

Refund

30. The Directorate of Finance may authorise, and cause to be paid, a refund of tax to any entity if erroneous overpayment is proven.

31. Investigation of a lodgement for the purpose of proving an erroneous overpayment may be instigated by the Directorate of Finance either at its own discretion or on the request of the entity involved.

Administration Generally

32. The Directorate of Finance must maintain complete and accurate records of all matters administered under this law.

33. The requirement in Article 32 shall include retaining confidential records of lodgements and payments for a period of not less than seven (7) years.

34. Once in each quarter, on a date which may be fixed by Regulation, the Directorate of Finance shall publish summary reports of taxation receipts and revenue in the Kingdom.

Penalties

Dereliction of Payment

35. A court of competent jurisdiction may order an entity to pay, in addition to its liability amount, a penalty not exceeding that liability amount if the entity is more than thirty (30) days derelict in payment of its tax liability.

Fraudulent Underpayment

36. A court of competent jurisdiction may order an entity to pay a penalty not exceeding three times the amount by which the entity has deliberately and fraudulently underpaid a tax liability as demonstrated by an investigation under articles 25 to 29, inclusive, above.

Maladministration

37. A court of competent jurisdiction may order the Royal Government to pay to an entity a penalty not exceeding three times the amount by which the entity was erroneously overcharged a tax by reason of an investigation and order for additional tax under article 29 above.

38. In addition to the above, it is a criminal offence for an official acting in the name of the Royal Government to deliberately and falsely order an entity to pay additional tax.

Breach of Confidentiality

39. It is a criminal offence to breach the confidentiality of taxation records and administration. A person or entity which is found by a court of competent jurisdiction to have caused such a breach is guilty of such offence.

Criminal Penalties

40. The penalty and/or other punishment for a criminal offence under this law shall be as determined by the court, having regard to the public interest and confidence in the administration of the Kingdom.

Receipt Tax

Receipt Tax Established

41. This Part enacts a universal tax called "Receipt Tax".

Liability for Receipt Tax

42. Subject to the exclusions in article 43, a liability for Receipt Tax arises when an entity receives money in the Kingdom by any means of transfer or exchange.

Exclusions

43. Transactions of the following nature are excluded and do not cause a liability for Receipt Tax -

1. exchange of money between two persons that is unrelated to and has no causal link to any provision of goods or services;
2. deposit to or withdrawal from a bank account;
3. purchase or sale of a financial instrument, including but not limited to Bonds and shares;
4. receipt of money as interest or dividend on a bank account or a financial instrument, or as redemption of a financial instrument;
5. receipt of a donation by a church or other organisation of exclusively charitable nature;
6. receipt from the Royal Government of a refund of tax;
7. receipt from the Royal Bank of Commerce of money solely paid to effect a change in official valuation of the Thaler.

Inclusions

44. For the avoidance of doubt, and not exhaustively, transactions of the following nature are included and shall be assessed for liability for Receipt Tax -

1. payments for goods and services;
2. salary payments, including those of the Crown Service;
3. receipt of money in the Kingdom caused by a transaction outside the Kingdom;
4. receipt of money as a prize, a windfall or an inheritance.

Method of Self-Assessment

45. For self-assessment purposes, an entity must record every receipt of money by the entity within the period of assessment, and calculate one-tenth (1/10th) or ten percent (10%) of that receipt, which amount shall be the tax liability.

Assessment Period

46. The assessment period for Receipt Tax is one quarter.

Lodgement

47. Not later than fourteen (14) days after the end of a quarter, an entity must complete a self-assessment and lodgment in respect of Receipt Tax. The lodgement shall declare a total of all receipts, but need not declare the sources of those moneys, and shall declare a liability of one-tenth (1/10th) or ten percent (10%) of that total, rounded down to the next whole Thaler.

Application of Credits

48. If an entity has credit arising from a previous overpayment, the liability declared in the lodgement shall be reduced by the amount of that credit.

Commencement

49. Receipt Tax shall commence and be applicable to all included transactions in the Kindgom on and from 1 April 2013.

Inactivity Tax

Inactivity Tax Established

50. This Part enacts a universal tax called “Inactivity Tax”. The tax involves the seizure of all Thalers in possession of an inactive entity to the Royal Government, to be returned to the entity upon application, minus an administrative fee.

Liability for Inactivity Tax

51. A liability for Inactivity Tax arises when an entity is inactive for a period of six (6) months on the Kingdom’s community forums.

Method of Assessment

52. The assessment of Inactivity Tax shall be conducted by the Directorate of Finance based on records provided by the Communications & Information Branch of the Ministry of Public Works for individual entity activity on the community forums.

53. For a natural person, the date of commencement of inactivity corresponds to the date of the last post made by that person on the community forums.

54. For an entity as registered under the Business and Corporation Registration Act, the date of commencement of inactivity corresponds to the date of the last post or transaction conducted by that entity, whichever is most recent.

Assessment Period

55. The Directorate of Finance shall conduct a review of entity activity on a monthly basis and, for any entity for which liability is established, execute the procedure of Articles 56 and 57.

Lodgement

56. Upon the Directorate of Finance determining that an entity is subject to Inactivity Tax, it shall send to that entity, via personal message to the entity’s community forum user account, a notice of liability. This notice of liability shall briefly explain the consequences of being liable to the Inactivity Tax, inform the entity of the seizure of all of its Thalers in possession, and explain how the entity may reclaim those Thalers in accordance with Articles 58 to 60, inclusive.

57. The Directorate of Finance shall, upon sending the notice of liability, seize all Thalers in the entity’s possession, transferring the full amount to the account of the Royal Government on the exchange.

Entity Return to Activity

58. An entity may apply for reimbursement of seized Thalers at any time following its return to inactivity or upon notification of its liability under Articles 56 and 57.

59. Upon return to activity, the entity may apply to the Directorate of Finance for the forthwith reimbursement of seized Thalers, using appropriate administrative procedures to be defined by the Directorate through statutory instrument.

60. An entity that returns to activity shall be subject to a three (3) month probationary period in which a new Inactivity Tax liability will be commenced if the entity is inactive for a one (1) month period during their probation.

Reimbursement of Seized Thalers

61. Where the Directorate of Finance has reviewed an application for reimbursement and found it to be in good order, the Directorate shall deposit to the exchange account of the entity an amount equivalent to the total sum of Thalers seized minus an administrative process fee, known as the Repatriation Fee.

Repatriation Fee

62. All seized Thalers returned to an entity shall be subject to the imposition of a Repatriation Fee that offsets the costs of the Directorate of Finance in respect of administering the Inactivity Tax.

63. The Repatriation Fee is non-refundable and shall be equivalent to 10% of the total sum of Thalers seized from the entity.

64. The Repatriation Fee shall be applied against the total sum of Thalers seized prior to reimbursement.

Unlimited Liability

65. An entity is continuously liable to being the subject of Inactivity Tax.

Commencement

66. Inactivity Tax shall commence and be applicable in the Kingdom on and from 1 May 2013. The Inactivity Tax shall not be retroactively applied.

Notes

Chamber of Deputies Hansard Record
Introduction Date:	2013-03-31
Tabled By:	His Royal Majesty
Vote Outcome:	In Favour: ; Against:
Royal Assent Date:	2013-03-31 (Article 28)