The Polish Order and changes to VAT regulations
On 26 July 2021, the Governmental Legislation Centre published a bill amending the act on personal income tax, the act on corporate income tax and certain other acts, or the so-called “Polish Order”. In the draft, the Ministry of Finance proposes multiple changes to income taxes and VAT.
Some of the regulations concerning the VAT Act that are particularly worth noting include:
- a possibility of joint settlements by several taxpayers from the so-called 'VAT group’ and
- sooner VAT refunds for certain taxpayers.
The primary aim of the former change – VAT group - is enabling entities that are associated financially, economically and organisationally to jointly settle their VAT liabilities. According to the governmental draft, the solution is to provide considerable savings to capital groups as well as lower servicing costs in terms of settlements with the KAS (National Revenue Administration). Importantly, in order to form a VAT group, the entities will have to meet certain conditions, viz.:
- have a seat on the territory of Poland (if this criterion is not met, the entities will be allowed to establish a VAT group insofar as they carry on business via a branch located on the territory of Poland),
- identify financial, economic and organisational links between the members of a VAT group, both at the time of establishment of the group and during its operations.
Moreover, the legislator has laid down additional restrictions indicating that a single entity may only belong to a single VAT group, a VAT group may not be a member of another VAT group, and the composition of a VAT group may not change during its duration.
Another change, involving a possibility of sooner VAT refunds to the so-called ‘cashless’ taxpayers, aims to promote cashless transactions in Poland.
According to the proposed solutions set out in the bill, the taxpayers at which for three consecutive accounting periods:
- the total sales including tax, recorded with online/virtual cash-tills has amounted to 80% of total sales including tax, and/or
- the payment received via payment instruments, including transfers for the sales made, documented with receipts have amounted to a minimum of 80% of total sales by means of online/virtual cash-tills,
will be eligible for a VAT refund within 15 days of the deadline for filing a relevant return or corrective return.
In addition, the taxpayers intending to request as sooner VAT refund should verify whether the total sales including tax recorded over the preceding 12 months via online/virtual cash-tills had not been lower, in each accounting period, than PLN 50,000.
The above changes are mere examples among numerous proposed amendments to tax regulations under the Polish Order. Given the considerable number of new solutions and the proposed deadline for their implementation, i.e. the beginning of 2021, it is worth perusing the draft now and analysing possible impact of the amendments on one's business.
Natalia Szymocha, Tax Consultant, ATA Tax Sp. z o.o.
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