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Proposal of the Cash Transaction Fiscalization Law

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The Croatian Chamber of Commerce's (HGK) IT association has organized the presentation of the Cash Transaction Fiscalization Bill for its members on Thursday, 2 August 2012 in HGK's new hall at Nova cesta in Zagreb.

The Fiscalization Bill, which was approved by the Croatian Government on 26 July and sent to parliamentary proceeding, was presented by Ministry of Finance, Tax Administration experts Vlasta Marinović and Goran Januš, assisted on some provisions by FINA's Andreja Kajtaz and APIS-IT's Zdravko Dragičević.

English translation of the Law is available here.

 


 

FINAL PROPOSAL OF THE
CASH TRANSACTION FISCALIZATION ACT

I. BASIC PROVISIONS
Article 1
This Act shall regulate the procedure of fiscalization of cash transactions, the parties obligated to implement fiscalization, contents of the fiscalization receipts, keeping the Register of fiscalization subjects for cash transaction fiscalization, the implementation of fiscalization, and oversight of the implementation of this Act.

Article 2
Certain terms, in the context of this Act, have the following meanings:
1. Fiscalization of cash transactions is a set of measures implemented by fiscalization subjects in order to allow for efficient oversight of realized cash turnovers.
2. The unique receipt ID is an alpha-numeric string, generated by software, using a determined set of information.
3. The following information is considered to be receipt elements: personal identification number (OIB) of the fiscalization subject, date and time, receipt number, a label stating if the fiscalization subject is part of the Value Added Tax system, receipt total sorted according to tax rate (sum total of the base fee and tax, tax-exempt amount), payment method, personal identification number (OIB) of the cash register operator, and the issuer's security code.
4. The security code of the issuer – fiscalization subject – is an alpha-numeric string which confirms the link between the fiscalization subject and the issued receipt.
5. Cash transaction is the payment of delivered goods or services using bills or coins which are considered to be legal tender, cards, cheques or other similar means of payment, except for payment via bank transaction accounts, unless otherwise specified by this Act.
6. Business premises are all closed or open spaces, and every mobile location (vans and delivery vehicles) whose purpose is the business activity of delivery of goods or services. For the needs of fiscalization, a single part or several parts of a single business premises in which different business activities are done can be considered as separate business premises. The premises used by the fiscalization subject on an occasional or temporary basis for the needs of holding fairs, seminars, or implementing similar business activities is also considered to be business premises. For field business activities, the fiscalization subject can determine by himself if it is necessary to separately manage a mobile business premises, depending on the nature of the business activity.
7. Minor fiscalization subjects are those fiscalization subjects for whom the simplified fiscalization procedure is prescribed.
II. FISCALIZATION SUBJECT
Article 3
The fiscalization subject is:
1. A natural person who is obligated to pay the income tax on independent activities, as stated in Article 18 of the Income Tax Act, and
2. A legal and natural person who is obligated to pay the profit tax, as stated in Article 2 of the Profit Tax Act,
for all business activities for which he is, as stipulated in special regulations, obligated to issue receipts for the delivery of goods or services.
Article 4
A fiscalization subject, as stated in Article 3, paragraph 1 of this Act, whose income and income tax are determined as a flat-rate according to the Income Tax Act and the Regulation of flat-rate taxation of independent activities, is considered to be a minor fiscalization subject.
Article 5
Apart from Article 3 of this Act, taxpayers who realize their turnover in the following business activities are not considered to be fiscalization subjects:
1. ticket or token sales in passenger transport,
2. road toll collection,
3. airplane refueling with petroleum products at airplane service stations,
4. sales of personally-grown produce at markets and open spaces,
5. sales of postal products and/or services,
6. receiving payments for participation in games of chance and amusement games,
7. sales of goods or services from vending machines,
8. sales of banking and insurance services,
9. managing a central depository of non-materialized securities and a central register of financial instruments,
10. gained turnovers that are logged using measuring instruments (electrical energy, gas, water, public communications services, etc.) by energy, sanitation, electronic communication and other legal persons, and
11. implementing healthcare (participating in healthcare costs up to the full price of the healthcare service at a primary healthcare physician's office of choice, and issuing prescription medicine).

Article 6
Starting from the specifics of a certain business activity, the Government of the Republic of Croatia can, at the Finance Minister's proposal, make a decision on exempting a certain business activity from the obligation of cash transaction fiscalization.

Article 7
If the fiscalization subject receives their revenue from several different business activities, they shall be exempt from the obligation of fiscalization only for business activities listed in Article 5 of this Act and for business activities exempt from fiscalization based on decision from Article 6 of this Act.

Article 8
(1) Fiscalization subjects are required to implement the fiscalization procedure in cash transactions.
(2) Fiscalization subjects are required, before issuing a cash transaction receipt, to perform every action prescribed by this Act for the implementation of fiscalization of issued receipts.

III RECEIPT CONTENTS
Article 9
(1) For the purpose of fiscalization, the receipt, apart from the information prescribed by special regulations, must contain the following information:
1. time when the receipt was issued (hour and minute),
2. cash register operator (person) ID,
3. ID of the means of payment– bills, card, cheque, transaction account, other,
4. Unique Receipt ID, and
5. security code of the issuer (fiscalization subject).

(2) Fiscalization subjects are required to state all the information listed in paragraph 1 of this Article, regardless of the way in which the receipt is charged.
(3) As an exception to paragraph 2 of this Article, the fiscalization subjects who charge their turnover using a means of payment not regarded as equal to cash by the Article 2 item 5 of this Act, are not required to display the information listed in paragraph 1, items 4 and 5 of this Article.
(4) The fiscalization subject is required to keep copies of issued receipts in accordance with provisions in the General Tax Act and special regulations.

Article 10
(1) Operator ID on the cash register, as the person who authorized payment using the electronic cash register from Article 9, paragraph 1, item 2 of this Act, must be linked to the personal identification number of that person by the fiscalization subject. The personal identification number (OIB) of the cash register operator is to be delivered to the Ministry of Finance, Tax Administration, as an element of the receipt, while implementing the fiscalization procedure of issued receipts.
(2) As an exception to paragraph 1 of this Article, as the personal identification number (OIB) of the operator, the fiscalization subject's personal identification number (OIB) can be delivered in case of natural person activities, issuing receipts using self-payment devices, and in other similar cases.

Article 11
(1) The receipt number, which is an integral part of the receipt according to provisions of special regulations, must be displayed in three parts in the receipt number field by the fiscalization subjects while implementing the fiscalization procedure:
1. numerical receipt number,
2. business premises ID number, and
3. cash register device ID number.
(2) The numerical receipt number from item 1, paragraph 1 of this Article, must be formed as an uninterrupted numerical sequence, without any spaces, for every business premises or cash register device within the business premises. Sequencing rules for the receipt numbers, list of business premises, and assigned business premises labels can be prescribed by the fiscalization subject's internal act, which shall be submitted for the needs of tax oversight.
(3) The uninterrupted numerical sequence for every calendar year must start from number 1 until number n, for each business premises or cash register in the business premises.

IV. REGISTER OF CASH TRANSACTION FISCALIZATION SUBJECTS

Article 12

(1) The fiscalization subject is required, in order to implement cash transaction fiscalization, to acquire a digital certificate from the Financial Agency, which shall be used in the fiscalization procedure to electronically sign receipt elements and to identify the fiscalization subject during electronic data interchange.

(2) The Finance Minister shall prescribe instructions for fiscalization subjects in a separate rule book on how to acquire the necessary certificates.

Article 13

The Financial Agency shall keep a Record of fiscalization subjects, according to data from downloaded digital fiscalization certificates.

Article 14

The Register from Article 13 of this Act shall contain the personal identification number (OIB), the full name of the fiscalization subject, the number of issued digital certificates, and the period of validity of the issued certificates.

V. THE FISCALIZATION PROCEDURE FOR ISSUING RECEIPTS

Article 15

(1) In order to implement the fiscalization procedure for issuing receipts, the fiscalization subject is required to issue receipts containing the Unique Receipt ID when issuing receipts paid for in cash.

(2) In order to implement the fiscalization procedure for issuing receipts, the fiscalization subject from paragraph 1 of this Article is required to deliver information on all business premises where business activities take place.

Article 16

(1) The fiscalization subject is required to issue receipts using electronic cash registers with the purpose of implementing cash transaction fiscalization according to the Article 15 of this Act.

(2) Electronic cash registers from paragraph 1 of this Article must be able to utilize program support for electronic signing of receipt elements and to enable an (Internet) connection for electronic data interchange with the Ministry of Finance, Tax Administration.

Issuance of receipts containing the Unique Receipt ID

Article 17

(1) The fiscalization subject, while issuing every cash transaction receipt, shall electronically sign elements of the receipt and deliver them to the Ministry of Finance, Tax Administration using the established electronic connection. The Finance Minister shall prescribe the form and structure (xml scheme) of the messages including the obligatory receipt elements in a special rule book.

(2) The Ministry of Finance, Tax Administration shall check if all prescribed receipt elements have been delivered and if they have been signed with a valid digital certificate.

(3) If the conditions from paragraph 2 of this Article have been cumulatively met, the Ministry of Finance, Tax Administration shall determine the Unique Receipt ID for elements of the receipt from Article 2, paragraph 3 of this Act and send it to the fiscalization subject through the established electronic connection. The text "JIR" is used as an abbreviation for Unique Receipt ID (Croatian: Jedinstveni identifikator računa). The Finance Minister shall prescribe the length and type of the Unique Receipt ID string in a rule book.

(4) If the Ministry of Finance, Tax Administration cannot determine the Unique Receipt ID, based on the conditions from paragraph 3 of this Article, it shall send the fiscalization subject a message about the rejection of the Unique Receipt ID through the established electronic connection.

(5) The Finance Minister shall prescribe in a rule book, for the purpose of implementation of the fiscalization procedure for issuing receipts, the protocols and security mechanisms for data interchange, the application model in which the central IT system for fiscalization subjects shall be used to send and sign electronic messages, the application model in which the sending and signing of messages is done individually on electronic cash registers, standard error messages, as well as protocols in case of errors.

Article 18

In cases stated in Article 17, paragraph 1 of this Act, the Unique Receipt ID and the fiscalization subject's issuer security code, along with other required information prescribed by Article 9 of this Act, shall be printed on the cash transaction receipt during the printout of the receipt on the electronic cash register. The Finance Minister shall prescribe in a rule book the methods of generating the issuer's security code, its length and string type.

Delivery of business premises information

Article 19

(1) The fiscalization subject from Article 15, paragraph 2 of this Act is required to deliver to the Ministry of Finance, Tax Administration, the data on all business premises where business activities take place.

(2) In order to implement the procedure of fiscalization of issuing receipts, the data on business premises from paragraph 1 of this Article must contain the following information:

1. OIB,
2. ID of the business premises,
3. address of the business premises,
4. type of business premises,
5. business hours and business days, and
6. the date from which the delivered data will become valid.

(3) The business premises ID from item 2, paragraph 2 of this Act, must be displayed in the same way as it is displayed on the receipt in the receipt number area – business premises ID, as prescribed by Article 11, paragraph 1, item 2 of this Act.

(4) As type of business premises from item 4, paragraph 2 of this Article, the way of doing business shall be listed (type of business activity, web store, mobile store, etc.) in all cases in which it is not possible to state the address of the business premises.

(5) The information from paragraph 2 of this article shall be delivered by the fiscalization subject for each individual business premises. The data is to be signed using a valid digital certificate and to be delivered via the established electronic connection when the fiscalization obligation starts, and before the cash transaction receipt is delivered.

(6) If the Ministry of Finance, Tax Administration shall verify if all required information has been delivered and if it has been signed using a valid digital certificate, and if the requisites have been cumulatively fulfilled, shall return a confirmation of having received it.

(7) If, based on the conditions from paragraph 6 of this Article, the Ministry of Finance, Tax Administration cannot receive business premises data, it shall return to the fiscalization subject a message stating that data was not received via the established electronic connection.

(8) If the data stated in paragraph 2 of this Article is modified for an individual business premises, and especially if business activities cease to be conducted on certain business premises, or the fiscalization subject starts conducting the business activities on new business premises, the fiscalization subject is required, before the initial usage of the modified data, to deliver the changed information in the way prescribed by paragraph 5 of this Article.

(9) The Finance Minister shall prescribe in a rule book the message form and structure for business premises data.

(10) The Finance Minister shall prescribe in a rule book, for the purpose of business premises data delivery, the protocols and security mechanisms for message interchange, application model which uses the fiscalization subject's central IT system for sending and signing electronic messages, the application model in which the sending and signing of messages is done individually on electronic cash registers, standard error messages, as well as protocols in case of errors.

Cash transaction fiscalization for minor fiscalization subjects

Article 20

(1) As an exception to the provisions in Article 16 of this Act, minor fiscalization subjects from the Article 4 of this Act, are required to issue a receipt which must be bound in a special book of receipts.

(2) The bound receipt book shall be certified before its usage by the Ministry of Finance, Tax Administration.

(3) Minor fiscalization subjects shall implement the fiscalization procedure by issuing receipts as prescribed by paragraphs 1 and 2 of this Article, without applying fiscalization procedures as prescribed by Articles 17, 18 and 19 of this Act.

(4) The Finance Minister shall prescribe in a rule book the content and procedure of certification of the bound receipt book.

VI. SPECIAL PROVISIONS

The impossibility of issuing a receipt containing the Unique Receipt ID

Article 21

(1) As an exception to paragraph 1 of Article 15 of this Act, in case the established connection from Article 17, paragraph 1 of this Act, is terminated, the fiscalization subject shall issue receipts containing information prescribed in Article 9 of this Act, without data on the Unique Receipt ID.

(2) The fiscalization subject is required to establish the electronic connection and deliver all issued receipts as described in paragraph 1 of this Article, no later than two days after the day in which the connection was terminated.

(3) The Ministry of Finance, Tax Administration shall determine the Unique Receipt ID for all delivered receipts and deliver it to the fiscalization subject as a confirmation of having received subsequently delivered receipts.

Failure of electronic cash register adapted for the implementation of fiscalization

Article 22

(1) If the electronic cash register as described in Article 16 of this Act completely ceases to function, the fiscalization subject shall issue receipts using the procedure prescribed in Article 20 of this Act for minor fiscalization subjects.

(2) In the case described in paragraph 1 of this Article, the fiscalization subject is required to re-establish the functioning of the cash register as described in Article 16 of this Act within two days from the day in which the device has ceased to function.

(3) Within the deadline prescribed in paragraph 2 of this Article, the fiscalization subject is required to deliver all issued receipts to the Ministry of Finance, Tax Administration through the established electronic connection.

(4) The Ministry of Finance, Tax Administration shall generate, for all delivered receipts from paragraph 3 of this Article, a Unique Receipt ID, and send it to the fiscalization subject as confirmation of having received subsequently delivered receipts.

(5) The fiscalization subject is required to write the received Unique Receipt ID information, immediately upon receiving it, on copies of issued receipts as prescribed in Article 20, paragraph 1 of this Act.

The implementation of fiscalization in areas where the data interchange connection cannot be established

Article 23

(1) If the fiscalization subject conducts his business activities or a part of his activities on business premises located in an area where it is not possible to establish the connection for the interchange of data with the Ministry of Finance, Tax Administration, the fiscalization subject will implement the receipt fiscalization procedure for that part of his business activities in the way prescribed by Article 20 of this Act for minor fiscalization subjects, until the connection becomes possible.

(2) The impossibility of establishing a data interchange connection can be demonstrated by the fiscalization subject with a certificate issued by the Croatian Postal and Electronic Communications Agency (hereinafter: HANFA), valid in the period of one year.

(3) The Finance Minister shall prescribe in a rule book the fiscalization subject's obligations and the proving procedure in cases when the data interchange connection cannot be established.

Article 24

All obligations prescribed by provisions of this Act regarding receipt issuing (receipt contents, receipt number) shall be applied in an adequate manner to issuing receipts for annulled receipts, or for receipts by which a partial or full goods or services refund is done. If, after annulling the receipt, a refund of paid amounts is done in cash, it is also possible to implement the fiscalization procedure for receipts which display negative amounts.

Receipt notice

Article 25

(1) The fiscalization subject is required to display, on all electronic cash registers or other visible places within the (indoor) business premises, the notice of obligation of issuing receipts and of the customer's obligation to take and keep the issued receipt.

(2) The Finance Minister shall prescribe in a rule book the layout and contents of the notice described in paragraph 1 of this Article.

Article 26

(1) The buyer and every receipt holder is required to keep the issued receipt after leaving the business premises.

(2) The customer is required to show the issued receipt upon request of an official, an officer of the Tax Administration.

Receipt verification

Article 27

(1) Buyers and all receipt holders, for fiscalized receipts, can verify if their receipt has been delivered to the Ministry of Finance, Tax Administration within 30 days of the receipt's issuing date.

(2) The verification is done by sending an SMS text message or by a web-inquiry on the Tax Administration website.

(3) Receipts issued by minor fiscalization subjects, receipts issued in the cases described in Article 22 of this Act, and receipts from paragraph 1 of this Article, can be delivered by the buyers or receipt holders to the competent Tax Administration branch office by giving them to an official or by delivering it in appropriate mailboxes in the Tax Administration's branch offices.

(4) The Finance Minister shall prescribe in a rule book the instructions on how to verify issued receipts using the Tax Administration's SMS text message or web-query services.

VII. PAYMENTS IN CASH BETWEEN FISCALIZATION SUBJECTS

Article 28

(1) This Article shall regulate payment in cash between fiscalization subjects.

(2) Cash, in the sense of this Article, are kuna banknotes, and kuna and lipa coins. Payment in cash is the direct transfer of cash between transaction participants, account deposits in cash, and cash withdrawal from an account.

(3) The fiscalization subject may pay another fiscalization subject in cash, unless prescribed otherwise by special tax regulations:
- for the acquisition of goods and services up to the amount of 5,000.00 kunas per one receipt,
- for the needs of supplying authorized exchangers with cash,
- for purposes based on special deliberations by the Finance Minister.

The fiscalization subject may pay citizens in cash, except for purposes which are, according to provisions which regulate the Income Tax, paid via citizen's accounts. The fiscalization subject is required to register every cash payment made out to citizens in compliance with special regulations according to which he keeps his business books.

(4) The fiscalization subject is required to deposit cash on his bank account, above a certain cashier maximum based on Article 28 of this Act, which was on any basis received during the business day, on the same day, or at the latest on the following business day.

(5) The fiscalization subject that has recorded outstanding dues on his bank accounts, the sequence of which is prescribed by special regulations, cannot make cash payments and/or keep cash in the cash register.

(6) The fiscalization subject from paragraph 5 of this Article is required to deposit the received cash on his regular business bank account immediately, or on the following business day at the latest.

Article 29

(1) The fiscalization subject, apart from the one from Article 28, paragraph 6 of this Act, can keep cash in the cash register at the end of the business day up to the cashier maximum. The cashier maximum is determined by the fiscalization subject independently with an internal act, according to security needs and conditions, up to the amount from paragraph 2 of this Article.

(2) The standard for setting the amounts up to which the fiscalization subject's cashier maximum can go to is the fiscalization subject's size according to the provisions of the Small Business Development Promotion Act. Based on this criteria, the fiscalization subject can determine a cashier maximum to the amount of:

- micro subject and natural persons: 10,000.00 kunas,
- small subject: 30,000.00 kunas
- medium subject: 50,000.00 kunas

(3) The cashier maximum is determined for fiscalization subjects as a whole, and within that amount the fiscalization subject can determine a cashier maximum for his organizational units.

(4) Fiscalization subjects who are over the limits which define a small business according to the Small Business Development Promotion Act may determine a cashier maximum in the amount up to 100,000.00 kunas.

(5) As an exception to paragraph 4 of this Article, the fiscalization subject may prescribe a cashier maximum per individual business premises, but only up to 15,000.00 kunas.

(6) Fiscalization subjects conducting money exchange business, regardless of the provisions in paragraphs 2 and 3 of this Article, may determine a cashier maximum in the amount up to 100,000.00 kunas.

VIII. OVERSIGHT

Article 30

(1) Oversight of the implementation of this Act and over the provisions based on this Act shall be carried out by the Ministry of Finance, Tax Administration.

(2) If it is determined during oversight procedures that the fiscalization subject has not implemented the fiscalization process as described in Article 8, Article 16, Article 17 paragraph 1, and Article 20 of this Act, the Ministry of Finance, Tax Administration may issue a injunction banning the fiscalization subject from doing business until the reasons for the ban have been resolved.

(3) An appeal against the injunction from paragraph 2 of this Article shall not delay its execution.

(4) The injunction from doing business prescribed by paragraph 2 of this Article shall be executed by sealing the business premises.

IX. PROCEDURAL PROVISIONS

Article 31

For all matters not defined by the provisions of this Act, the General Tax Act provisions shall be utilized.

Article 32

The misdemeanor proceedings due to violations of this Act's provisions shall be conducted, in the first instance, by the competent judicial body of Ministry of Finance, Tax Administration.
Article 33

For procedures prescribed in this Act, there shall be no administrative tax.

X. FINES FOR TAX OFFENSES

Article 34

(1) The fiscalization subject shall be fined not less than 10,000.00 nor more than 500,000.00 kunas if they:

1. issue receipts which do not contain all information prescribed by this Act (Article 9, paragraphs 1 and 2, Article 15, paragraph 1)
2. do not deliver the business premises information (Article 15, paragraph 2, and Article 19, paragraph 1)
3. deliver a business premises report without all information prescribed by this Act (Article 19, paragraph 2)
4. do not prove the impossibility of establishing a data interchange connection using a HAKOM certificate (Article 23, paragraph 2)
5. make payments in cash contrary to the provisions from Article 28, paragraph 3 of this Act
6. do not deposit their cash turnover in an account according to the provisions from Article 28, paragraphs 4, 5, and 6 of this Act.

(2) For offenses from paragraph 1 of this Article, the responsible person of the legal person fiscalization subject shall be fined not less than 1,000.00 nor more than 50,000.00 kunas.

Article 35

(1) The fiscalization subject shall be fined not less than 5,000.00 nor more than 500,000.00 kunas if they:

1. for the purpose of receipt element delivery, do not connect the operator ID with the operator OIB on the cash register for the purpose of receipt element delivery and do not deliver the operator OIB to the Ministry of Finance, Tax Administration (Article 10),
2. do not ensure receipt number issuance in the manner prescribed by provisions of this Act (Article 11),
3. do not acquire a digital certificate from the Financial Agency in order to implement cash transaction fiscalization (Article 12),
4. within two days, counting from the day in which the connection was interrupted, do not establish the electronic connection and do not deliver all issued receipts (Article 21, paragraph 2),
5. within two days, counting from the day in which the connection was interrupted, do not establish the functioning of the cash register and do not deliver the issued receipts (Article 22, paragraphs 2 and 3),
6. do not write the information, or do not write it in a timely manner, about the received Unique Receipt ID on the copies of issued receipts from Article 20, paragraph 1 of this Act (Article 22, paragraph 5),
7. do not act according to provisions for the issuing of receipts while annulling the receipt (Article 24),
8. do not display the notice about the obligation of issuing receipts and the buyer's obligation to take and keep the issued receipt in their business premises on each cash register or other visible place (Article 25).

(2) For offenses from paragraph 1 of this Article, the responsible person of the legal person – fiscalization subject shall be fined not less than 1,000.00 nor more than 40,000.00 kunas.

Article 36

The buyer and each receipt holder who does not keep the issued receipt after leaving the business premises, or does not show it at the request of an official, shall be fined not less than 200.00 nor more than 2,000.00 kunas (Article 26).

XI. TRANSITIONAL AND FINAL PROVISIONS

Article 37

(1) As of 1 January 2013, the obligation of fiscalization shall be prescribed for fiscalization subjects, for large and medium businesses, as stated in the Accounting Act regardless of their business activity, and for fiscalization subjects whose one of several business activities is the accommodation business activity, and preparing and serving food (Label I of NKD 2007 area).

(2) As of 1 April 2013, the obligation of fiscalization shall be prescribed for fiscalization subjects, who are not mentioned in paragraph 1 of this Article, meaning fiscalization subjects whose their business activities are retail and wholesale, and motor vehicle repair (Label G of NKD 2007 area), and those subjects whose business activity is free personal enterprise, as listed in Article 18, paragraph 2 of the Income Tax Act.

(3) As of 1 July 2013, the obligation of fiscalization shall be prescribed for all fiscalization subjects.

(4) The Finance Minister shall prescribe in a rule book the mode of electronic cash register system testing which can be done by the fiscalization subjects prior to the commencement of the fiscalization obligation.

Powers of the Minister

Article 38

The Finance Minister is authorized, within the period of one month after this provision comes into force, to prescribe in a rule book the following:

1. instructions for fiscalization subjects regarding procedures for acquiring appropriate certificates from Article 12, paragraph 2 of this Act,
2. the length and type of string for the Unique Receipt ID (Croatian: JIR) which the Tax Administration shall deliver as confirmation of successfully received receipt elements from Article 17, paragraph 3 of this Act,
3. form and structure (xml scheme) of messages containing obligatory receipt elements from Article 17, paragraph 1 of this Act,
4. modes of generating, length and string type for the receipt issuer's security code, which confirms the link between the fiscalization subject and the issued receipt from Article 18 of this Act,
5. form and structure of messages regarding business premises from Article 19 of this Act,
6. protocols and security mechanisms for message interchange, the application model which uses the centralized IT system for fiscalization subjects for sending and signing electronic messages, the application model in which sending and signing messages is done individually on electronic cash registers, standard error messages, error protocols from Article 17, paragraph 5, and Article 19, paragraph 10 of this Act,
7. content and procedure of certification of the bound receipt book from Article 20, paragraph 4 of this Act,
8. obligations of the fiscalization subject and the proving procedure in cases in which it is impossible to establish a data interchange connection as prescribed in Article 23, paragraph 3 of this Act,
9. layout and contents of the notice about the obligation of issuing receipts and the buyer's obligation to take and keep the issued receipt from Article 24, paragraph 2 of this Act,
10. instructions on the method of verifying issued receipts using the Tax Administration's services (SMS, web) from Article 26, paragraph 4 of this Act, and
11. the method of testing electronic cash register systems which can be carried out by fiscalization subjects before the obligation of fiscalization comes into force, as prescribed in Article 37, paragraph 4 of this Act.

Article 39

This Act shall come into force on January 1 2013, except for Article 25, Article 26, and Article 35, paragraph 1, item 8, all of which shall come into force on 1 July 2013, and Article 23, paragraph 2, and Article 38 of this Act, both of which shall come into force on the eighth day after the publishing day of this Act in Narodne novine.

EXPLANATION
I. REASONS FOR THE CREATION OF THE ACT
A problem of all modern countries is the constant struggle and effort to raise the level of consciousness regarding the need to pay taxes. Through constant and ensured taxation, the budget can be evenly filled, which then enables the entire state to function normally, through financing of public expenditures.
All countries register a certain rate of grey economy, which poses a significant problem for the economy's development, and also for the functioning of the state. Croatia's economy is no exception to this. The level of tax morality, i.e. the level of financial discipline, is not at a satisfactory level today in the Republic of Croatia. This is corroborated in the data gathered by the European Values Survey (2008), conducted in 47 European countries. The object of its research was to test tax-paying culture and to measure factors that influence the level of tax evasion (trust in institutions, distribution of honesty, life quality, etc.). Research results have shown that the Republic of Croatia, together with other countries from the region, is very low-ranked among regular tax-payers, which again indicates a high level of tax evasion. Furthermore, research indicates that the factors which lead to tax evasion are the taxpayers' views on the fairness and complexity of tax regulations, about the state and the services it offers, the level of punishment for tax evaders, but perhaps the most important one was the ease of tax evasion.
Parts of the analysis in question can be applied to available data on the incomes of entrepreneurs doing business in the Republic of Croatia. According to the analysis of their stated incomes, i.e. profits in their businesses, it is apparent that most of their business transactions are done over bank accounts. A detailed analysis of a certain number of taxpayers from different areas has shown that the rate of cash transactions in those taxpayers is not higher than 15 per cent of their total revenue. Also interesting is the data on businesses which have no cash transactions at all. Cash transactions are registered mostly in the following businesses: hospitality and related services, retail and some of the service industry businesses. According to statistical reports on yearly income tax statements for trade crafts and free enterprises, businesses which mostly make their revenue in cash, there is a very low rate of business being done.
Thus, for example, from yearly income tax statements from natural persons who are in the hospitality business (restaurants, bars, etc.), on the basis of statements for 2010, the average daily turnover (365 days) is around 620.00 kuna, which implies that the average daily income is 100.00 kuna. Along with this data, it should be noted that these same taxpayers employ 1.5 employees in the same period.
From yearly income statements of natural persons who are in the retail business, on the basis of statements for 2010, the average daily turnover (365 days) equals 734.00 kuna, and the average daily profit is equal to 85.00 kuna. Along with this data, we note again that these taxpayers employ 0.7 employees in the same period.
After having analyzed all available data and all research, it is justified to question the objectivity of all reported cash transactions. Tax oversight of cash transaction registration has also confirmed this. Such tax oversight is very difficult to do, as it comes down to constant logging of product stock and services and comparing it to actual revenue. Oversight procedures spend enormous amounts of energy in order to efficiently and timely detect violators and remove them from the market using tax sanctions in order to create space for those who regularly settle their tax obligations.
Therefore, it can be concluded that non-issuance of receipts, with or without deals to reduce the price in the amount of the owed tax, is a daily occurrence in tax transactions. However, the damage done by not issuing cash receipts is multiple. By not registering cash revenue, the taxpayers do not pay the taxes in the total amount of their business, which is not even the basis for their income or profit tax. In this way, the budgets lose their inflow from value-added tax, income tax, profit tax and surtax. Furthermore, amounts that are charged without a receipt for the cash transaction allow individuals to fill up their private accounts, without settling their civic obligations. In this way, the citizens are not even aware of the fact that their payments do not participate in public expenditures, but help increase individuals' private account funds. The consequence is the creation of unfair competition; the receipt non-issuers collapse the prices and the possibility of competition for other honest taxpayers, while the budget loses its income from taxes. In order to compensate for the non-collected tax funds which are necessary for stable financing of public expenditures, other means of taxing must be undertaken, which eventually becomes a burden mostly for the citizens.
This phenomenon can be successfully eliminated by coordinated mutual oversight of receipt issuing, especially for cash transactions, which would be done together by the state and the citizens who receive the receipts.
The state needs to create an effort and make the conditions possible in order to:
- prevent tax evasion or reduce it to the minimum;
- upgrade tax oversight procedures and make them quick, efficient and effective;
- raise the buyers' level of consciousness about how receipt non-issuers do not pay taxes, how they break tax laws, and cause bigger taxes or other forms of public payment in the long run.
One of the measures used to fight tax evasion in the form of non-issued receipts is also the procedure of fiscalization, a set of measures which introduces oversight of cash transaction receipts. A significant number of countries have introduced a form of fiscalization. European Union work bodies have discussed the need to introduce fiscalization for cash transactions. After having considered different solutions, their recommendations have been directed towards the fact that the process of fiscalization must be implemented in an open way, and not in a way where a certain hardware or software manufacturer will be able to hold a monopoly.
Applied fiscalization solutions differ from country to country, but they all come down to two basic forms: the introduction of fiscal cash registers – devices (a hardware solution) or a receipt issuance control system (a software solution).
The experiences of countries which have implemented fiscalization by introducing fiscal devices today point to some of the problems of that model. The introduction of fiscal cash registers requires the certification and control of fiscal cash registers at all sales points, which translates to a new number of state employees (with special skills) who can determine, by direct inspection, if a sales point has a certified cash register and if there are other devices, which requires yet another number of employees. Furthermore, seeing how only certain cash register types satisfy fiscalization requirements, such solutions impose the usage of one or several types of cash registers, which can lead to the monopoly of a certain manufacturer. The buyers, as persons who receive the receipts in this fiscalization model, do not see a role for themselves and thus cannot be relied on the implementation of the fiscalization procedure.
Countries which have chosen software solutions as their fiscalization models point towards similar experiences. The model requires usage of special software, i.e. a single market solution, or the implementation of a certification system for such special software solutions. What differentiates this model from the fiscal device model is a possible step forward, because this solution allows for further system upgrades, so that it can, if necessary, exchange data with the Tax Administration. The main disadvantage of this model is the monopoly of the software manufacturer.
Some of the countries are considering or have already implemented systems which are a combination of both solutions. In this way it is possible to combine the advantages and disadvantages of both models in the most optimal manner. According to available information, such a solution is being developed in Germany (a combination of digital receipt signing and local data storage on an additional device).
Looking at EU work bodies recommendations, at experiences of other countries which have implemented some of the fiscalization models, and comparing the effects of implemented fiscalization procedures, and also costs that come with it, this Act suggests the introduction of fiscalization in cash transactions which would be a combination of the above stated solutions, which will create satisfactory benefits as compared to accompanying costs.
That is why this Act will regulate the way in which cash transactions will be implemented, define those businesses who will have to implement fiscalization, as well as the fiscalization model; it will regulate the mandatory parts of a receipt which will serve for efficient implementation of tax oversight, define the implementation stages, the possibility for fiscalization subjects to pay in cash, and all other provisions important for the implementation of fiscalization.
According to the Act, subjects obligated to implement fiscalization are:
- natural persons who are obligated to pay the income tax on independent personal activities (craft trade and other equal services, free enterprise, and, under certain conditions, agriculture and forestry),
- natural persons who are obligated to pay the profit tax, and
- legal persons obligated to pay the profit tax (corporations and others),
if they are obligated to issue receipts according to special regulations.
In order to simplify the fiscalization procedure for certain fiscalization subjects who do business on a smaller scale, the notion of "minor fiscalization subjects" is introduced. According to the Act, natural persons, whose income is determined in a flat rate according to the Income Tax Act, are considered to be minor fiscalization subject.
Furthermore, as certain businesses can be successfully monitored through measurable quantities (e.g. measuring expenses), such businesses do not require the introduction of fiscalization, and the Act lists business activities which do not carry the obligation of fiscalization, regardless of the obligation to issue receipts according to special regulations. However, as it is not possible to predict all business activities and their specifics, there will be a provision allowing to the Government of the Republic of Croatia to make a decision about waiving the cash transaction fiscalization obligation for certain business activities, after the proposal of the Finance Minister.
By introducing fiscalization, the act creates the conditions to use the prescribed procedures to the fullest in order to successfully implement partial tax oversight. That is why additional provision regarding the receipt's contents will be included, in order to use the data to monitor employee work at the employers during their work hours. Moreover, in order to successfully implement tax oversight, the method of numbering issued receipts will be prescribed in order to be able to efficiently track all issued receipts.
With the purpose of implementing fiscalization in cash transactions, it is prescribed that the fiscalization subjects are to acquire a digital certificate which is used for electronic signing of receipt elements and for fiscalization subject identification during electronic data interchange. This introduces the necessity for fiscalization subjects, who must implement the process of fiscalization of receipt issuing, to issue their receipts using electronic devices. Laws currently in force only prescribe the contents of the receipts, without getting into specific modalities of how to issue the receipts; they prescribe that a receipt can be issued using a cash register or in other suitable ways. Electronic devices must allow for:
- usage of software support for electronic signing of receipt elements, and
- usage of an (Internet) connection for electronic data interchange with the Ministry of Finance and Tax Administration.
The obligation of issuing receipts using adapted electronic cash registers will mean that some fiscalization subjects will have to acquire the devices, and those who already have them will have to upgrade them in order to be able to implement fiscalization procedures.
According to the provisions of this Act, it is implemented in two parts:
- by issuing a receipt which includes a Unique Receipt ID, and
- by delivering business premises information.
The fiscalization subject, during the issuance of each cash transaction receipt (i.e. before the receipt is printed), will electronically sign elements of the receipt and deliver them to the Ministry of Finance, Tax Administration over an established electronic (Internet) connection. The Ministry of Finance, Tax Administration will check whether all prescribed receipt elements are delivered and whether they are signed using a valid digital certificate. If the cumulative conditions are met (all receipt elements and a valid digital signature), the Ministry of Finance, Tax Administration will generate a Unique Receipt ID (Croatian abbreviation: JIR) and send it to the fiscalization subject via the established electronic connection. This interchange is done within seconds and enables receipt printout which includes the JIR, which means that the printed receipt has been certified by the Tax Administration.
The fiscalization subject is required to deliver information on business premises in which business activities take place, before the implementation of receipt fiscalization. The business premises ID is also part of the receipt number, so these two elements allow for quick determination of where this receipt has been issued. Furthermore, by tracking issued receipts according to business premises, it is also possible to keep track of turnovers for each business premises, which is especially important for the implementation of tax procedures.
Parties with minor fiscalization obligation are considered "minor" exactly because a smaller level of business activity, which allows them the right of flat-rate taxation. That is why those with minor fiscalization obligation are not required to issue receipts using electronic cash registers; they can certify at the Ministry of Finance, Tax Administration a special receipt book from which they issue sequentially numbered receipts. In the described way, the parties with minor fiscalization obligation also implement fiscalization by issuing certified receipts, but have no additional fiscalization implementation costs, unlike other fiscalization subjects (acquiring devices and software with digital certificate support, acquiring digital certificates, acquiring digital signing applications, connecting to the Internet, software maintenance, etc.).
The Act prescribes practical procedures, such as interruption of the established connection or device malfunction, and prescribes procedures for those cases, so that such situations do not hinder the implementation of fiscalization.
The Act also prescribes the obligation of keeping a Register of fiscalization subjects. The Register is kept by the Financial Agency. The purpose of the Register is to get statistical data regarding the number of fiscalization subjects.
The purpose of fiscalization implementation is to introduce oversight of cash transactions. The most important component of fiscalization is the citizens who pay their goods and services using cash. It is those citizens who become aware of the fact that the tax they pay in the price must end up in the budget, and not in someone's private account; they become citizens-inspectors. By delivering the Unique Receipt ID, the protective code or the certified receipt, the citizens allow the state the possibility of control, and become aware that the payment of taxes through payment of receipts makes them participants in public expenditures. Based on the stated reasons, this Act allows the citizens to verify their receipts by sending a text message or by doing an inquiry on the Tax Administration's website and see if their receipts have been certified by the Ministry of Finance, Tax Administration. There is also the possibility for the buyers (i.e. recipients of the receipt) to deliver the receipts issued by minor fiscalization subjects to the competent Tax Administration branch office by giving it to an official or by inserting it into an appropriate mailbox.
Summing up, fiscalization brings great advantages, but it also requires both the Tax Administration and taxpayers' systems to be adapted. Taxpayers need to acquire suitable devices and program support, get connected and get the necessary certificates. The Tax Administration needs to establish a centralized data input and certification systems, and develop an electronic oversight system for cash transactions. In order to leave enough time to adapt, a phase-by-phase introduction of fiscalization is also prescribed.
As the goal of the Act is to prescribe the ways of conduct in cash transactions, its provisions also prescribe when and under what conditions the fiscalization subjects may pay bills in cash, and when they must deposit their cash turnovers in open accounts.
To conclude, it is important to note that the introduction of fiscalization also brings a series of indirect positive effects:
- software development is stimulated, as well as IT support,
- market competition is stimulated,
- electronic business activity is developed,
- informatization of the society as a whole is encouraged, and
- the taxpayers themselves, i.e. the fiscalization subjects, are enabled in establishing an efficient system for personal internal control of their employees' work.

II. ISSUES REGULATED BY THIS ACT
This Act regulates the following basic issues:
- it is prescribed who is considered a fiscalization subject,
- provisions regarding receipt contents are prescribed, so that additional receipt contents could allow for efficient oversight over realized cash turnovers
- the way of keeping the fiscalization subjects Register is prescribed
- the procedure of implementing receipt fiscalization is prescribed
- provisions regarding payment in cash between fiscalization subjects are prescribed
- other provisions important for the implementation of fiscalization.

III. EXPLANATIONS OF THE INDIVIDUAL PROVISIONS
For Article 1
Article 1 of the Act prescribes the areas which are regulated by the Cash Transaction Fiscalization Act: the cash transaction fiscalization procedure, fiscalization subjects, contents of the fiscalization implementation receipt, Register of fiscalization subjects, special fiscalization implementation provisions, payment in cash by the fiscalization subjects, and oversight over the implementation of the Act.

For Article 2
Terms used in this Act are defined in such a way that they are listed together with the meanings of those terms.

For Article 3
It is prescribed who is considered a fiscalization subject.
According to the Act, a fiscalization subject is:
- natural persons who are obligated to pay the income tax on independent personal activities (craft trade and other equal services, free enterprises, and, under certain conditions, agriculture and forestry),
- natural persons who are obligated to pay the profit tax, and
- legal persons obligated to pay the profit tax (corporations and others),
who are obligated to issue receipts according to special regulations. This means, for example, if someone is exempt from the obligation of issuing receipts according to Value Added Tax Act provisions, they are also exempt from fiscalization according to the provisions of this Act.
For Article 4
In order to simplify the fiscalization procedure for certain fiscalization subjects whose business activity is on a smaller scale, the notion of minor fiscalization subject is introduced. That is why this provision prescribes who can be considered a minor fiscalization subject.
According to the Act, a minor fiscalization subject is a natural person fiscalization subject, whose income from independent activity is determined in a flat-rate amount according to provisions of the Income Tax Act.

For Article 5
As the performance of certain business activities can be successfully tracked using measurable quantities (e.g. measuring consumption), such activities do not require the introduction of fiscalization. That is why the provision of this article lists the business activities which do not have the obligation of fiscalization.

For Article 6
As it is not possible to predict all business activities and their specificities, this provision allows the Government of the Republic of Croatia to make a deliberation, upon the Finance Minister's proposal, about exempting a certain business activity from the obligation of cash transaction fiscalization.

For Article 7
As the exemption from the fiscalization obligation is prescribed for business activities, and the fiscalization subjects can perform several business activities, including those exempt from fiscalization, it was necessary to prescribe the procedure in such cases. Thus, it is prescribed that if the fiscalization subject makes his revenue from various activities, he shall be exempt from fiscalization only for those activities stated in Article 5 of the Act, i.e. for those activities which are exempt from the obligation of fiscalization by a decision from the Government of the Republic of Croatia, based on Article 6.

For Article 8
The fiscalization subjects are prescribed the obligation for implementation of cash transaction fiscalization. However, the fiscalization provision also means the necessity of timely preparation for fiscalization subjects, so they are ready to implement fiscalization when the need to issue a cash transaction receipt arises. That is why the obligation of timely preparation for fiscalization is prescribed.

For Article 9
The contents of the receipt are prescribed by the provisions of special regulations (e.g. the Value Added Tax rule book, the Income Tax rule book). Therefore, this provision prescribes additional element the receipt must contain in order to implement fiscalization successfully. Additional elements, prescribed for the purpose of fiscalization, are considered to be: time of issuance (hour and minute), cash register operator ID (person), ID of the means of payment– bills, card, cheque, transaction account, other, Unique Receipt ID, and security code of the issuer fiscalization subject.

For Article 10
It is prescribed that the cash register operator ID, as the person who delivered the goods or services, i.e. who actually charged the receipt, must be linked to the personal identification number (Croatian: OIB) of that person. The cash register operator's OIB shall be delivered to the Ministry of Finance, Tax Administration as an element of the receipt. This ensures an additional tax oversight possibility regarding the persons working for the fiscalization subject, especially the comparison of the stated data with the data that is still being collected in the fiscalization procedure, such as work days and work hours.
Also prescribed are the cases in which operator OIB displayed on the receipt will be identical to the receipt issuer's OIB.

For Article 11
The construction of receipt IDs, which are an integral part of each receipt according to special regulations, is prescribed. It is prescribed that the numerical receipt ID must follow a chronological numerical sequence without spaces, for every business premises or cash register within the business premises, depending upon the fiscalization subject's decision. This means that the fiscalization subject will determine their own way of creating the numerical sequence (or per business premises, or per cash register), but the procedure must be clear and prescribed by an internal document. The numerical IDs are issued every calendar year from number 1 to number n.

For Article 12
For the purpose of implementing cash transaction fiscalization, it is prescribed that the fiscalization subject is required to obtain a digital certificate which shall be used, in the process of fiscalization, to digitally sign elements of the receipt and to identify fiscalization subjects during electronic data interchange.

For Article 13
The obligation to keep a Register of fiscalization subjects is prescribed.

For Article 14
The Register's contents are prescribed.

For Article 15
The fiscalization procedure is prescribed for issuing receipts, which shall be implemented in two parts, according to the Act:
- by issuing receipts which contain the Unique Receipt ID, and
- by data on business premises.

For Article 16
This provision introduces the obligation for fiscalization subjects to issue their receipts using electronic cash registers. Current law provisions only prescribe the contents of the receipt without defining the process of issuing it; they prescribe that a receipt can be issued using a cash register or in another adequate way.
The provision states that the fiscalization subject is required to issue receipts using electronic cash registers which must allow for:
- using program support for digital receipt element signing, and
- using an (Internet) connection for electronic data interchange with the Ministry of Finance, Tax Administration.
The obligation of issuing receipts using adapted cash registers will signify, for some fiscalization subjects, the obligation to acquire devices, and for those who already have the devices, their upgrade so fiscalization could be implemented.

For Article 17
This provision prescribes the fiscalization procedure in the part of issuing a certified receipt.
It is prescribed that the fiscalization subject, while issuing every cash transaction receipt (i.e. before printing it), must digitally sign the receipt's elements and deliver them to Ministry of Finance, Tax Administration via an established electronic connection. The Ministry of Finance, Tax Administration checks if all required receipt elements have been delivered and if they have been signed using a valid digital certificate. If the cumulative conditions have been met (all receipt elements and a valid digital signature), the Ministry of Finance, Tax Administration creates a Unique Receipt ID (JIR) and returns it to the fiscalization subject via the established electronic connection. This interchange happens within several seconds and enables printout of the receipt which features the JIR, which means that the printed receipt has been certified by the Tax Administration.
If the Tax Administration determines that not all receipt elements have been delivered, or have not been properly signed, the Tax Administration will reject the JIR determination process and send that message to the fiscalization subject.
The point of the Tax Administration's certification using JIR is in the fact that a Unique Receipt ID is created, which enables every buyer to verify if the tax, that he is paying to the seller, has already been reported to the Tax Administration.

For Article 18
It is prescribed that, with other necessary data prescribed in Article 19 of the Act, the cash transaction receipt, while being printed on the electronic cash register, must also feature the Unique Receipt ID and the security code of the issuer fiscalization subject.
The security code of the fiscalization subject is a string which connects the subject and the issued receipt, and according to later provisions, it has a special meaning in the case of terminated data interchange connection, because the receipt is then only printed with the fiscalization subject security code. The security code will be used for receipt verification.

For Article 19
This provision prescribes the fiscalization process for issuing of receipts regarding the delivery of business premises information.
It is prescribed that the fiscalization subject is required to deliver information on business premises in which business activities take place before the start of the obligation of fiscalization. Business premises are labeled with the same labels which are cited in the part of the receipt ID number. This allows for the tracking of issued receipts by business premises, which is especially important for the implementation of certain tax procedures.
The information is delivered before the start of the procedure of fiscalization, and afterwards only when necessary, when some of the delivered data is modified.

For Article 20
Minor fiscalization subjects are considered as minor because of their low level of business activity. That is why minor fiscalization subjects are not required to issue receipts using electronic cash registers; they can certify a special receipt book marked in ordinal numbers at the Ministry of Finance, Tax Administration. The provision prescribes that minor fiscalization subjects are required to issue a receipt which has to be bound in a special book.
In the described way, minor fiscalization subjects do implement fiscalization by issuing pre-certified receipts, but have no other fiscalization implementation costs, unlike other fiscalization subjects (acquiring devices which support digital signing, Internet connection, acquiring a digital certificate, an Internet network, software maintenance).

For Article 21
In case the established electronic connection is interrupted, it is prescribed that the fiscalization subject shall issue receipts containing what prescribed in Article 9 of the Act, without Unique Receipt ID information. A deadline is determined (two days, starting from the day in which the interruption occurred) in which the fiscalization subject (not applied to minor fiscalization subjects) is required to re-establish the electronic connection and deliver all issued receipts, and the Ministry of Finance, Tax Administration shall determine Unique Receipt IDs for all delivered receipts and deliver them to the fiscalization subject as a confirmation of having received subsequently delivered receipts, all via the subsequently established electronic connection.

For Article 22
The manner in which the fiscalization subject is required to act is prescribed in case of total failure of the cash register used for issuing receipts, and it is defined that, in that case, they shall issue receipts according to the procedure prescribed for minor fiscalization subjects, and in the period of two days (counting from the day in which the total failure occurred) they are required to re-establish function of the cash register. In the same period, the fiscalization subject is required to deliver all issued receipts via the established electronic connection. The Ministry of Finance, Tax Administration shall generate Unique Receipt IDs for all delivered receipts and deliver them back to the fiscalization subject as the confirmation of having received subsequently delivered receipts, while the fiscalization subject is required to write the Unique Receipt ID information on all issued receipt copies, bound in a special book marked with ordinal numbers, immediately upon having received the Unique Receipt IDs, in accordance to Article 20, paragraph 1 of the Act.

For Article 23
For areas where it is impossible to establish the data interchange connection, fiscalization subjects will implement the same simplified fiscalization procedure as the minor fiscalization subjects. However, they must prove the impossibility of establishing the connection by using a HAKOM certificate.

For Article 24
It is prescribed that all provisions of this Act regarding the issuance of receipts shall be applied to the issuance of annulment receipts.

For Article 25
It is prescribed that the fiscalization subject is required to display the notice about the obligation of issuing receipts and the buyer's obligation to take and keep the issued receipt in the business premises on each cash register or other visible place.

For Article 26
It is prescribed that the buyer and every receipt holder is required to keep the issued receipt after leaving the business premises, and that the buyer is required to show the issued receipt upon request of an official, an officer of the Tax Administration.

For Article 27
The purpose of fiscalization implementation is to introduce oversight of cash transactions. The most important component of fiscalization is the citizens who pay their goods and services using cash. It is those citizens who become aware of the fact that the tax they pay in the price must end up in the budget, and not in someone's private account; they become citizens-inspectors. By delivering the Unique Receipt ID, the protective code or the certified receipt, the citizens allow the state the possibility of control, and become aware that payment makes them participants in public expenditures.
That is why this provision prescribes the modality of receipt verification for citizens. The possibility of verifying if their receipt was reported to the Ministry of Finance, Tax Administration is prescribed for buyers and all receipt holders, which can be done by SMS text messaging or by a web-query on the Tax Administration's website. There is also the possibility for the buyers or receipt holders to deliver the receipts issued by minor fiscalization subjects and receipts issued in cases referred to by Article 22 of the Act (receipts issued in case of fiscal cash register failure) to the competent Tax Administration branch office by giving it to an official or by inserting it into an appropriate mailbox.
For Articles 28 and 29
These Articles prescribe the possibility of payment in cash between fiscalization subjects. For the purpose of these Articles, payment in banknotes and coins is considered as cash. The possibility of this kind of payment between parties is limited up to 5,000.00 kunas. As these subjects do business in cash, it is also prescribed at what time they have to deposit the collected money on their bank accounts. The cashier maximum provisions are very important provisions which allow for the successful implementation of distraint procedures.
For Article 30
It is defined that oversight of the implementation of this Act and provisions based on this Act shall be carried out by the Ministry of Finance, Tax Administration.

For Article 31
It is prescribed that for all matters not defined by the provisions of this Act, the General Tax Act provisions shall be utilized.

For Article 32
The provision prescribes jurisdiction over misdemeanor proceedings. The proceedings shall be conducted by the competent judicial body of the Ministry of Finance, Tax Administration.

For Article 33
It is defined that for procedures prescribed in this Act, there shall be no administrative tax.

For Article 34
Minimum and maximum fines are prescribed, to which the fiscalization subject and its responsible person can be sentenced in case of a tax offense; misdemeanors are listed for which fines have been defined.

For Article 35
Minimum and maximum fines are prescribed, to which the fiscalization subject and its responsible person can be sentenced; misdemeanors are listed for which fines have been defined.

For Article 36
Minimum and maximum fines are prescribed, to which the buyer and every receipt holder can be sentenced if they do not keep the issued receipt after leaving the business premises or if they do not show it upon an official's request.

For Article 37
As the Act shall come into force on 1 January 2013, the fiscalization obligation shall be set for all fiscalization subjects. In order to leave enough time for all subjects to adapt, this provision prescribes a gradual introduction of fiscalization according to groups of fiscalization subjects. Full enforcement for all fiscalization subjects, including minor fiscalization subjects, shall come into force on 1 July 2013.
Therefore, it is prescribed, as an execption to Article 8 of this Act, the gradual introduction of the fiscalization obligation for certain subject groups, and it is determined what those groups are, while from 1 July 2013 the obligation of fiscalization is prescribed for all fiscalization subjects.

For Article 38
The Finance Minister is given authorization to create rule books, and the deadline for their creation is defined.

For Article 39
The enactment of the Act is prescribed.

IV. MEANS FOR THE IMPLEMENTATION OF THIS ACT

To implement this Act, the cost of establishing a central system of data input and certification, and an electronic cash transaction oversight system will cost 13 million kunas in the first year, and 15 million kunas in the following two years. At the same time, it is expected that fiscalization will add an increased tax revenue stream of about 1 billion kunas per year, with the exception of the first year, when, considering the phase introduction of fiscalization, an increased revenue stream of about 500 million kunas is expected. The estimate of expected revenue has been calculated on the basis of transaction data of those business activities in which payment of goods and services is usually done in cash, and on the basis of data regarding the levels of grey economy. The funds for implementing this Act have been ensured in the state budget, because the implementation of the system means developing the Tax Administration's IT system, the cost of which has been anticipated by the Framework agreement for the services of usage, maintenance and the development of new functionalities, and for the Tax Administration's IT system adaptation to EU requirements, signed by the Ministry of Finance, Tax Administration and APIS-IT ltd.

V. DIFFERENCES BETWEEN SOLUTIONS PROPOSED IN THIS FINAL PROPOSAL AND THOSE IN THE FIRST VERSION, AND REASONS WHY THEY WERE MADE

The final proposal of the Cash Transaction Fiscalization Act is different from the proposal of the Act which was in its first reading in the partially accepted suggestions laid out during the discussion in the Croatian Parliament, and in suggestions and notes given by the public and professional associations.

As the notes and suggestions were partially accepted, the Final version of the Act features the following modified provisions:

Article 1

The provisions regulated by this Act have been expanded to also cover provisions regulating the payments between fiscalization subjects in cash. As the Decision on Conditions and Ways of Cash Payment (Narodne novine n. 36/02) is no longer being implemented, the area regarding the ways and amounts of cash payment between fiscalization subjects was not regulated by law. As the scope of this Act is precisely to regulate the area of business cash transactions, it will also become regulated.

Article 5

The business activities for which the implementation of fiscalization procedures is not necessary have been modified in such a way that the activities of ticket and newspaper sales have not remained exempt, because of the frequency of such transactions, the proportionally high cash turnovers, and the necessity of oversight. Furthermore, it has been precisely determined that only the sales of personally-grown produce sold in markets and open spaces will be exempt from fiscalization, and not the procedure of sales of other people's products.

The prescribed exceptions have been expanded to cover the insurance activities, maintaining central depositories and providing healthcare services (participating in healthcare costs up to the full price of the healthcare service at a primary healthcare physician's office of choice, and issuing prescription medicine), due to the possibility of successful tracking of measurable quantities, which proved the implementation of fiscalization to be unnecessary.

Article 11

The way of numbering receipts has been more precisely defined. The goal is to be able to determine the sequence of previously issued receipts, but also the location where the receipt was issued. That is why the parts of the receipt are precisely defined: numerical ID number, business premises ID number, and cash register ID number.

Articles 13 and 14

As it is necessary to acquire a certificate used exclusively for the purpose of fiscalization, issued by FINA, the obligation to maintain a Register of fiscalization subjects has been shifted to FINA.

Article 19

The first proposal of the Act listed the obligation of delivering a daily report, which was a control sum of everything delivered earlier through individual receipts. In order to reduce the necessity of delivering control data, the daily report delivery was eliminated. However, an integral part of the daily report was the information on business premises, their business hours and business days. As fiscalization tracking was reduced to a business premises belonging to an OIB, the daily report was replaced with a premises message delivered only once, and after that only when changes have occurred.

Article 23

The fiscalization implementation procedure is prescribed for areas in which it is impossible to establish a data interchange connection. According to available data, only 5 per cent of Croatian territory is not covered by a connection, and for subjects doing business in those areas the same fiscalization procedure is prescribed as for minor fiscalization subjects. The impossibility of establishing a connection must be proved by using HAKOM certificate.

Articles 28 and 29

In accordance with the explanation for Article 1, these Articles regulate cash transactions among fiscalization subjects. The amount of 5,000.00 kunas is prescribed as a maximum cash transaction, as is the cashier maximum amount, which regulates the amount of cash turnover which the subject can keep in his cash register without the obligation of depositing it on a bank account.

Article 30

The Tax Administration is authorized to seal the business premises – an injunction against doing business for fiscalization subjects not implementing the fiscalization procedure.

Article 39

The last article changes the provisions regarding the dates when the Act comes into force. According to the altered provisions, it is now made possible for some provisions to come into force eight days after publishing the Act in Narodne novine (the official gazette), i.e. before the Act itself comes into force. The following two provisions will come into force on that date: the provision giving the Finance Minister the authorization to create a rule book necessary for the implementation of the Act, and a provision stating that HAKOM may issue a certificate saying that the fiscalization subject is doing business in an area where it is not possible to establish an Internet connection, so that the same subject will be allowed to implement fiscalization in the same way the minor fiscalization subjects do. The necessity for these provisions to come into force before the entire Act does, comes from the necessity to adapt and for the fiscalization subjects to actually be able to start implementing fiscalization on the day the Act comes into force. Had these provisions not come into force earlier, the Finance Minister would not be able to create a rule book before the start of fiscalization obligation, and it is the rule book which will explain the technical details of fiscalization, which must be known to the subjects in order for them to start issuing fiscalized receipts as of 1 January 2013. The same applies to the subjects doing business in the areas where an Internet connection cannot be established, who need to prove the fact before 1 January 2013, otherwise they would be obligated to start with fiscalization on that date.

VI. SUGGESTIONS AND REMARKS NOT ACCEPTED BY THE PROPOSING SIDE, EXPLAINED

During the plenary session, some remarks have been laid out, which have not been accepted. Below are the more important remarks and reasons why they were declined.

The discussion poised a question asking why the obligation of fiscalization is mandatory for large tax subjects who, because of the integrity of their systems, have to register each issued receipt. We would like to point out the following: This Act prescribes the obligation of fiscalization for all fiscalization subjects, i.e. for natural persons who are tax subjects based on their individual business activity from Article 18 of the Income Tax Act, and for legal and natural persons who are considered Gains Tax subjects according to Article 2 of the Gains Tax Act, regardless of their size. The intention of this Act is to ensure efficient oversight of cash turnover registration, and that is why the obligation of fiscalization is mandatory for everyone doing business in cash, regardless of size.

Remarks have also been addressed regarding possible expenses the fiscalization subjects will have while adapting to the requirements for the implementation of fiscalization. According to the provisions of this Act, the fiscalization subjects are required to issue receipts using compatible electronic cash registers, which will mean the necessity of acquiring devices for some subjects, while for those who already have them it only means an update with the purpose of implementation of fiscalization. Depending on that, there will be differences in expenses for the needs of fiscalization. Apart from that, the Act does not require minor fiscalization subjects to issue receipts using electronic cash registers; fiscalization is implemented by issuing previously certified receipts, which creates no additional costs for the implementation of this system.

In view of remarks regarding doubts about the Tax Administration's readiness to follow the fiscalization procedure as prescribed, and the subjects' readiness to adapt to fiscalization, i.e. the necessity of delaying the Act's enactment, we state the following: the Ministry of Finance, Tax Administration is currently in the process of building and establishing the system necessary for the implementation of cash transaction fiscalization, and it will be ready within the deadlines prescribed by this Act. We note that right now, the system is being tested. On the other hand, gradual introduction has been planned for the subjects, exactly in order to leave them with enough time to adapt.