The transport package – changes and concerns
Further work on the draft regulations applicable to the monitoring of road transport of goods
Excise Duty Express 02/2017 | 9 February 2017
On 7 and 8 February 2017, the first and the second reading of the bill concerning the monitoring system for road transport of goods (the "transport package"), proposed by the government, took place in the course of parliamentary work. Together with the "fuel package" and the "energy package", it constitutes a comprehensive regulation aimed to eliminate VAT and excise duty fraud. The proposed bill sets out additional obligations for entities trading in and transporting the goods identified therein which, if not complied with, may involve the imposition of severe sanctions. From the perspective of the previous legislative work, it appears that the legislator is clearly inclined to enact the regulations as soon as practicable, which means that business entities may have very little time to get prepared for the new requirements.
Changes at the stage of interministerial consultations
The original version of the bill was modified in the course of interministerial consultations. While the monitoring system will still consist in the submission of reports containing information on transported goods by the dispatching and receiving entities as well as drivers, the author of the bill resigned at this stage from the imposition of an obligation to monitor the transport using appropriate GPS locators.
Generally, the list of goods subject to the monitoring obligation has not changed and it includes such items as ethyl alcohol falling beyond the excise duty exemption procedure, engine fuel, lubricating oil and lubricating preparations, some solvents and diluters, or alcohol-based defrosting agents. The goods identified originally in the regulation were introduced to the act itself. The provisions governing penalties levied on the supply chain participants have not been modified substantially.
The planned enactment date has been changed to 1 March 2017 and penalties may be imposed on business entities as of 1 April 2017.
Concerns raised during Committee meetings
In the course of the first reading, both Committee members and other participants in the legislative process identified a number of issues which might arise from the draft regulations, including the speed of enactment, which does not allow business entities to get prepared for the changes effectively, the need to set out more detailed provisions in the absence of specific guidelines on vehicle retaining and returning (e.g. where the fleet is leased), a lack of differentiation of the severity of administrative penalties in the case of a mistake or an error which does not result in a decrease of government revenue or inadmissibility of amendments to applications.
Additionally, during the debate, a representative of the Ministry of Finance noted that apart from the goods referred to in the act, the implementing regulation may define other items subject to the monitoring obligation. The list of goods to be included in the regulation is to comprise rapeseed oil. Its further extension was not ruled out, though.
Although in its current shape, the bill does not set out the obligation for the supply chain participants to monitor the transport on an ongoing basis using GPS, representatives of the Ministry of Finance did not rule out that it would be imposed later on.
Amendments proposed during the first and the second reading
The first reading – 7 February
In the course of the first reading, the Committee did not support the motion filed by some MPs to establish a subcommittee with a view to examining the bill thoroughly, thus moving to the vote on the amendments proposed to the bill.
During the voting session it was further clarified that in the case of such goods as fuel and its derivatives as well as items containing ethyl alcohol, the monitoring obligation shall apply to the transport of goods whose gross weight exceeds 500 kilograms or whose capacity is larger than 500 liters (which did not remove doubts about such goods as dried tobacco, though).
What is important, the Committee members were not in favor of the proposed postponement of the enactment date or the effective date for the imposition of penalties for a failure to comply with the requirements.
The second reading – 8 February
The second reading of the bill resulted in the introduction of one important amendment (which was subsequently adopted by the parliamentary committee). Ultimately, the motions filed by business entities were seconded through the postponement of the date as of which penalties may be levied for non-fulfilment of the obligations imposed under the act to 1 May 2017. The act itself is to enter into force fourteen days of its publication.
Considering the legislative agenda, the last, third reading of the bill may be expected to take place on Friday, 10 February. After the third reading, the bill will be brought before the Senate, which may introduce further amendments thereto.
In their latest version, the proposed modifications may have a considerable impact on the operations of a large group of business entities. Fulfilment of the obligations under the drafted act may require the implementation of appropriate enterprise risk management procedures and mechanisms, changes to logistics processes, relevant training to employees or modification of contracts with transport service providers.
Considering the previous legislative work, it seems that the legislator is acting in haste to enact the proposed regulations. This means that entities operating in a number of industries may have to ensure compliance with the new requirements in a very short time. We will keep you updated on further stages of the legislative process.