An Application of Fiscal Unity Principle in VAT System / Primjena principa fiskalnog jedinstva u sistemu pdv-a

Abstract

Fiscal unity principle in taxation includes a taxing group of persons interconnected with particular personal and economic links as a single taxpayer. In economic sense the principle is used for profit taxation and value added tax (VAT) of group of undertakings, interconnected with majority owner, common interests, business and financial links. By taxing group of undertakings in VAT system multiple economic, financial and fiscal benefits for taxpayers and tax administrations are achieved. Aiming at single implementation of the fiscal unity principle within the EU the European Commission has issued a set of single rules for VAT groups taxation. Although the Law on VAT in BiH enables a joint registration of composed undertaking as a single taxpayer due to rigid legal provisions a concept of VAT groups has not been implemented by now. It is in interest of BiH to relax the rules for VAT grouping, in order to improve liquidity of companies and encourage business combinations and concentration of undertakings within BiH.