New principles governing the issuance of binding rulings
1 January 2016 will be the date of entry of the new provisions of law amending the principles which have governed the issuance of binding rulings to date. The new provisions have been enacted in order to assure certainty and protection to taxpayers in the process of applying the tax law. Material modifications will be made to the provisions on both individual and general binding rulings, and changes will relate not only to the scope thereof, but also to the procedure of handling matters as well as the rights and powers of authorities and applicants.
General binding rulings
Following the amendment, general binding rulings will gain on significance. The amended provisions of the Tax Regulations will specify directly the mandatory elements of general binding rulings – they should, in particular, not only describe the problem but also explain the scope and manner of application of interpreted provisions to the described problem along with providing legal rationale. But another important change will decide that general binding rulings will have a bigger role – the legislator has decided to implement a new legal institution to the Tax Regulations, namely a decision finding that a general binding ruling issued under the same legal regime is applicable to the factual state or future event presented in the request for an individual binding ruling and the request for a ruling is thus groundless. Such decision should also designate the said general binding ruling and where it has been published. The taxpayer who does not agree with the decision issued will have the right to file a complaint. What is important, when filing a complaint, the taxpayer will not be able to challenge the interpretation of law made in the general binding ruling, as the latter is unappealable. The complaint may be filed only on grounds that the factual state or future event presented in the request is not in compliance with the problem covered by the general binding ruling. Such compliance will be the necessary condition for the National Tax Information Office Director to issue the above decision.
Individual binding rulings
The amended Tax Regulations will extend the catalogue of tax authorities by adding the National Tax Information Office Director, who will be the competent authority in matters relating to the issuance of individual binding rulings. So as of the beginning of the next year, individual binding rulings will be no longer issued by the Minister of Finance. Implemented changes are neutral for authorities such as commune head, mayor (president of the city), poviat staroste or province marshal, who may also issue individual binding rulings in accordance with their powers, e.g. in relation to local taxes and charges. The powers of the National Tax Information Office Director will include also, to the extent arising from the authorisation of the Minister of Finance to act on his behalf, given to the Director by way of a Regulation, activities such as, inter alia, changing individual binding rulings when summons to remove violation of law are considered and, in specified circumstances, finding individual binding rulings expired, revoking the same and issuing decisions, as well as changing and revoking the same.
The amending Act will also extend significantly the powers of the Minister of Finance, authorising him in certain cases to:
- change a general or individual binding ruling that has been issued, if he finds the same incorrect,
- revoke an individual binding ruling and discontinue the proceedings for the issuance of an individual binding ruling,
- find an individual binding ruling expired if it is not in conformity with a general binding ruling issued under the same legal regime,
- revoke an individual binding ruling that has been issued and issue a decision on the application of a general binding ruling,
- change a decision on the application of a general binding ruling in the event that the general binding ruling designated in such decision has been changed,
- revoke a decision on the application of a general binding ruling, if the factual state or future event presented in the request for a ruling does not correspond to the problem covered by the general binding ruling designated in the decision, and refer the request for an individual binding ruling for re-consideration.
Also authorities such as commune head, mayor (president of the city), poviat staroste or province marshal will be authorised to change individual binding rulings issued by those authorities, to revoke such rulings and find them expired, as well as to change or revoke a decision on the application of a general binding ruling.
Another novelty will be the provision restricting requests for individual binding rulings in terms of their subject matter – it will not be possible to submit requests regarding the provisions which govern the competence and the rights and powers of tax authorities and fiscal control authorities. But the applicants will be definitely happy with the possibility to contact the authority at any time by phone or e-mail and demand that the date of issue of the binding ruling be provided to them, and above all – that assessment of the applicant’s position made in the ruling be provided, or that the applicant be informed of another way of handling the matter. Such information should be provided at the latest on the next business day following the date of issue of the ruling or, if the ruling has already been issued, without delay.
Also the principles for returning the fee on a request for a binding ruling will change. The fee will be returned in full if the request is withdrawn and in part if request is withdrawn partially or if the fee higher than required has been paid.
Undoubtedly changes implemented by the legislator are aimed at limiting the number of individual binding rulings issued and unnecessary bureaucracy. This objective is to be achieved also by enabling two or more interested parties to submit the so called joint requests, provided that they are involved in the same factual state or future event. A party to the proceedings for the issuance of an individual binding ruling will be one of the entities and the ruling will be issued to such entity, while the other participants will receive its certified copy (or a decision). In the case of joint requests, the fee for the issuance of a binding ruling, calculated in accordance with general principles, will be multiplied by the number of entities interested in the issuance of a ruling.