Tax adviser services for the members of the Croatian Chamber of the Economy

The Croatian Competition Agency (CCA) gave its comments to the Croatian Chamber of the Economy on the Criteria for the use of tax advisory services for the members of the Croatian Chamber of the Economy (HGK).

The CCA gave its opinion based on the writing that it had received arguing about how HGK has been distributing vouchers to its members which entitle the holders to free-of-charge tax advisory services provided by certified tax advisers in line with the Tax Payer Assistance Act. Allegedly, the service has been provided by a tax adviser selected by HGK, which in accordance to the initiative, distorts competition by placing particular bidders at a competitive disadvantage.

The CCA carried out a legal analysis of the Invitation to tender for the provision of tax advisory services to HGK members, asked for the opinion about the matter concerned from HGK and examined the bidding requirements and the criteria for the use of tax advisory services available on the web site of HGK.

It is specified in the bidding requirements that the tax advisory services may be provided to the members of HGK by certified tax advisers in compliance with the Tax Payer Assistance Act. The service is ensured to all members of HGK and consists of freecharge coupons that are distributed to the members of HGK. One coupon is worth one query i.e. one opinion or one piece of advice of the certified tax adviser. The number of coupons is limited to 35 queries monthly whereas the applications are opened on the first day of each month and closed once this maximum monthly quota is filled.

First, the CCA encourages the public bidding procedure for the provision of the services concerned since it enables all interested undertaking to participate in the bidding.

However, without prejudice to the powers of HGK to support the undertakings – its members in their businesses and issues that are important for them to carry out the economic activity at issue, and exclusively in the sense of competition rules, the CCA notes that the invitation to tender should nevertheless respect the basic principles of competition law.

Concretely, the requirements of the bidding should be designed so as to ensure that any potential bidder (undertaking) is able to bid on equal terms. Therefore it is advisable for the contracting authority to set the criteria of the tender that match the subject-matter of the contract and ensure that no unjustified obstacles to competition are created.

That is to say, the invitation to tender concerned contains a requirement quoting that only a bidder whose legal form is that of a general partnership under the Companies Act or a subsidiary of a tax counselling company may participate in the bidding. In the view of the CCA such a requirement hinders the access to the market for smaller undertakings registered as independent or self-employed businesses that carry out tax advisory activities.

In other words, the criterion stipulating the legal status of an undertaking – eligible bidder excludes in this particular case all undertakings that are registered as self-employed businesses although separate rules ensure tax advisers registered as independent or self-employed businesses to carry out the activity concerned either as self-employed or as general partnerships or subsidiaries of tax consulting companies.

Additionally, the criteria defining the capacity of the tax advisory undertaking to meet the deadlines in the provision of the service concerned (a three-day-deadline for responses to the queries) and other criteria involving additional qualifications and general experience of the certified tax advisers – eligible bidders may constitute additional restrictions for the above mentioned independent tax advisers and smaller general partnerships or subsidiaries of tax consulting companies that do not meet the statutory requirements.

Namely, in the sense of competition rules it is advisable to identify the bidding criteria so as to enable the bidder to make a self-assessment of whether it is capable of providing the service within the set deadline. On the other hand, the contracting authority should have the opportunity to receive a number of bids and select the best bid and to terminate the contract in case of inability of the bidder to meet the obligatory deadline.

At the same time, the requirements defining the general experience of the bidder (a minimum of 10 years of professional experience of a tax adviser of which 5 years he/she was active as a certified tax adviser) are also found restrictive in the view of the CCA.

Taking everything into account, the CCA recommended in its opinion that the number of employees and the experience in carrying out the activity concerned should be listed as special circumstances that would be appreciated by the contracting authority in the selection of the best bidder but not identified as a separate requirement that in the view of the CCA restricts the entry to the bidding to a considerable number of interested bidders.