Abstract

To opt for taxation under the flat-rate scheme for corporate income, a taxpayer must meet several conditions. One of them is the employment requirement. A taxpayer subject to this regime must employ a specified number of people. What is puzzling in this context (and has extremely significant practical implications) is whether a breach of this condition in the first year will result in the ZAW-RD becoming ineffective, or in the loss of the right to this tax preference at the end of the first year. If the first conclusion were correct, such a taxpayer would incur tax arrears, whereas in the second scenario, there would be no arrears. However, the conclusions drawn from a literal interpretation differ from those arising from a purposive interpretation. This article aims to verify which type of interpretation should be applied in this regard.