Reinstated sanctions and other VAT changes in force as of 1 January 2017
Amendment to the VAT Act, the Tax Code and the Fiscal Penal Code
Tax Alert 21/2016 | 24 September 2016
In the recent weeks the Ministry of Finance has been working on the bill amending the VAT Act, the Tax Code and the Fiscal Penal Code, referred to as the tax loopholes closing package. The amended regulations will come into force as of 1 January 2017.
- Reverse charge of VAT
- Registrartion of VAT payers
- Elimination of quarterly returns
- Reinstated sanctions in VAT
- Changes to regulations on VAT refund
Changes in reverse charge and joint and several liability mechanism
The proposed amendments include extension of the list of goods and services to which the reverse charge mechanism will apply. This group will include processors (for the maximum amount of PLN 20 thousand), specified gold and silver goods and various types of construction services (specified in Appendix 14 to the Act). Moreover, HDDs, SSDs and stretch film will be added to the list of goods to which the joint and several liability of the customer will apply. The bill introduces more stringent conditions for releasing the buyer from joint and several liability and additional conditions which should be fulfilled by the seller to make a performance bond. Such conditions may include a requirement to authorize the bank having its registered office in Poland, which keeps the account specified in the request for taxpayer identification number, to which payments are made for the supply of goods specified in Appendix 13, to provide tax authorities or tax inspection authorities with information on any and all transactions on the account.
Amendments to regulations on registering VAT payers
In accordance with the bill, the head of the tax office will have the right to refuse to register an entity as a VAT payer if the data in the request for VAT payer identification number prove incorrect, the entity does not exist or cannot be reached despite appropriately documented communication attempts. The bill also specifies the conditions for removing the taxpayer from the register, e.g. if the taxpayer filed tax returned for six consecutive months or two consecutive quarters, where he did not disclose sale or purchase with amounts of deductible tax, unless justified by the business type. Moreover, joint and several liability of the attorney-in-fact (up to PLN 500 thousand) will be introduced for tax arrears of a the represented taxpayer, which have occurred as a result of the taxpayer’s participation in undue tax settlements aimed at deriving financial benefits (for actions carried out in the period of 6 months of the registration date).
Elimination of quarterly returns and the obligation to file tax returns and summary reports in electronic form
Other propositions include waiving the requirement to file quarterly returns for entities other than small-scale taxpayers (starting from tax returns for the first settlement period in 2017) and introduction of the general obligation to file tax returns online. On an exceptional basis from 1 January 2017 electronic tax returns must be filed by VAT EU taxpayers and taxpayers making domestic supplies or purchases in the reverse charge mechanism. Summary reports will be filed online as well.
Reinstated sanctions in VAT
If in his tax returns the taxpayer declares a tax liability amount lower than the amount due (or in other cases specified in the bill), the head of the tax office or the tax inspection authorities will have the right to determine the correct liability amount and an additional tax liability equal to 30 per cent of the understated liability. The bill will also impose sanctions (100% tax rate) on fraudulent taxpayers. In line with the Tax Code late payment interest will also be charged on an additional tax liability. However, increased late payment interest on such a liability will not be imposed.
Changes to regulations on VAT refund
The key change is aimed at limiting the possibility to return the tax difference in the shorter period of 25 days to strictly specified cases. One of the requirements specified in the act is to hold the status of an active VAT payer for at least 12 months before the period when the taxpayer requests for VAT return. Moreover, the justification of the return will require an additional review and the 25-day return period may be prolonged until the review is completed.
Modification of the principles of input VAT deduction in intracommunity acquisition of goods
Changes implemented in response to incorrect declarations of intra-community acquisition of goods will condition the right to reduce the output tax by the amount of input tax (e.g. in intra-community acquisition of goods) upon disclosing the output tax in the taxpayer’s tax returns for the period when the tax point occurred within a period not to exceed 3 months from the month when the tax point occurred. If it happens later, the taxpayer will have the right to account for the input tax in the current tax returns.
Amendments to the Fiscal Penal Code
The tax loopholes closing package also assumes more stringent fiscal penal sanctions on persons involved in tax fraud, e.g. imprisonment for issuing or using "empty invoices".
The full text (in polish) of the draft amendments is available at: https://legislacja.rcl.gov.pl/projekt/12290205