Binding Rate Information - a new tool for taxpayer protection
Currently, many taxpayers struggle to determine a proper VAT rate applicable to the goods sold or services provided by them. In order to clarify such doubts, taxpayers have often applied for a classification opinion to the Main Statistical Office, which, however, is not binding and as such does not serve to protect a taxpayer in a potential dispute with the tax authorities.
Certainty as to the correctness of the VAT rates applied is to be ensured to taxpayers by a new institution, i.e. Binding Rate Information (hereinafter: BRI), to be issued in the form of decision by a dedicated Director of the Revenue Administration Chamber, for the purposes of taxation on the supply of goods, import of goods, ICS or provision of services. A BRI will be issued at the request of a taxpayer holding a Tax Identification Number or an Ordering Party for the purposes of Public Procurement Law. A decision obtained by the taxpayer will contain:
- Description of the goods or services in question;
- Classification of the goods according to the CN or of the services according to the Polish PKWiU;
- The tax rate applicable for the goods or service(s).
Under the new provisions, a BRI will be binding upon tax authorities with respect to the taxpayer who obtained it and with respect to the specific goods or services for which it was issued. As a result, a tax authority will not be in a position to challenge the tax rate applied by a taxpayer in accordance with a BRI obtained, provided that the goods in question answer the description set out in a relevant application.
Quite importantly, any taxpayer will be entitled to rely on a BRI where the goods or services in question answer the description set out in an application made by another entity. In such cases, following a BRI must not harm the taxpayers. Therefore, no tax offence or tax misdemeanour proceedings will be issued against them, nor will default interest be charged.
It is worth noting that a relevant decision will expire by operation of law in the event of change in VAT regulations directly concerning the goods or services covered by a BRI where such amendment results in the decision being inconsistent with the new regulations (for instance, where the VAT rate for certain goods has changed).
Under the amendment, no tax ruling will be issued in the area covered by a BRI. The filing fee for an application will be PLN 40 and its template will be set out in a regulation by the Minister of Finance. The relevant authority, in turn, will be obliged to issue a BRI without undue delay, not later than within 3 months of the receipt of an application.
A BRI can be obtained as early as after 1 April 2019; however, only with respect to transactions to be made after 1 January 2020. Furthermore, in order to make access to the decisions easier, a BRI Database will be created where the decisions – after deletion of sensitive data - will be published.
Anna Skórska, Tax Consultant, ATA Tax Sp. z o.o.
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