The Ministry of Finance has done away with a recent directive requiring businesses to be in good standing as taxpayers to receive any payment for goods or services delivered to the state. In a statement released last week, Finance Minister Calle Schlettwein said the directive has been amended because it negatively affected the cash flow position, particularly for smaller businesses.
“The Ministry has assessed the impact of the directive and found that it indeed improved (tax) collection. However, an unintended consequence was that it made it harder for especially smaller businesses to manage cash flows,” read Schlettwein’s statement.
The Ministry of Finance’s recent directive stems from an increase in the number of defaulters in paying taxes, which has resulted in an escalation of the number of taxpayers in arrears.
Part of the measures to improve compliance with tax payments included a directive issued on August 15 requiring businesses to be in possession of a Tax Good Standing Certificate to qualify for tenders and payments. While this is no longer the case, businesses will need a Tax Good Standing Certificate to qualify in any bidding or tendering process.
Schlettwein added that all accounting officers in government offices and agencies, and all chief regional officers, chief executives at town councils and all those in charge of state-owned enterprises have been instructed to issue payment even when the business does not have a Tax Good Standing Certificate.
In August this year Schlettwein said tax evaders were being allowed to “get away with murder” but noted that government’s newly established revenue agency will soon be up and running to boost the collection of tax to improve government coffers.