Act XLV on Retail tax (“Retail tax Act”) has been enacted and published on 9 June, according to which Governmental Decree No. 109/2020 (“Decree”) has been abolished.

As summarized in our previous Tax Alert, the main provisions outlined in the Retail tax Act, such as taxable persons, taxable activities, tax base and tax rates, reflect the rules as had been previously set out in the Decree.

From a procedural point of view, it should be noted that taxpayers who have already filed their advance tax returns for tax year 2020 are not obliged to repeat the filing. Nonetheless, the advance payment schedule will be amended as follows:

• the monthly advance amount declared in the advance return would be payable by the end of June;
• for the remaining period, the advance calculated as the number of months falling between July till the end of the tax year multiplied by the monthly advance amount is due to be paid in two equal instalments, by 20 August and 20 October.

For entities with a tax year differing from the calendar year, if the date of the second instalment occurred after the balance sheet date, the total advance will be due in a lump sum by the date of the first instalment (i.e. 20 August). Also, if both the first and second instalments occurred after the balance sheet date, the total amount will be payable by the last day of the tax year.

The annual tax return will be due by the last day of the 5th month following year-end. In terms of tax year 2020, annual tax is calculated on the basis of the total taxable income realized in the tax year, pro-rata according to the number of days falling within the effective validity date of the Decree (i.e. 1 May) and the balance sheet date. Advances paid under the Decree (i.e. May and June) will be deductible from the annual tax liability declared under the rules of the Retail tax Act.