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Tax schemes – doubts are increasing and explanations are missing

2020-05-26

As of January 1, 2019, pursuant to the Act on October 23, 2018, amending the Personal Income Tax Act, the Corporate Income Tax Act and the Tax Code, a new chapter regulating the issue of reporting tax schemes (MDR) was added to the Tax Code, i.e. Chapter 11 – “Information on tax schemes”.

On assumption, MDR regulations were supposed to provide the revenue administration with information that could contribute to the improvement of quality of the tax system. However, in reality, due to the fact that the act implementing the MDR only partially transposed the EU directive into the national regulations and the Polish regulations have turned out to be far from being developed, a number of doubts have arisen among taxpayers obliged to report tax schemes.

In order to settle the resulting ambiguities, the Ministry of Finance decided to issue explanations to the MDR regulations, which, however, had little effect, as instead of solving the existing problems they introduced more.

Given the numerous doubts and irregularities and in order to duly fulfil their obligation to report tax schemes, taxpayers began to submit to the Head of the National Revenue Information Service applications for issuing individual tax rulings on the MDR.

Unfortunately, there have been further difficulties here. As indicated by the Voivodship Administrative Court (WSA) in Poznań in its judgment, case no. I SA/Po 825/19 of December 5, 2019, the Head of the National Revenue Information Service may refuse to issue a private tax ruling regarding reporting of tax schemes, because, as a rule, tax rulings concern substantive law and not procedural law. As the MDR regulations are not substantive law and do not concern a tax liability – the issued tax ruling would not give the taxpayer any protection.  

Considering the above, the following questions arise: “How do the tax authorities expect taxpayers to fulfil their reporting obligations when they do not have appropriate tools to do?”, and “Should incorrectly implemented provisions of the EU Directive be applied in the legal system?”. It is difficult to answer these questions, but there is no doubt that in this situation the consequences of negligent and underdeveloped actions of the legislator are borne by nobody else, but taxpayers.

 

Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.

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