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Government wants to implement other new provisions preventing tax fraud

2017-03-30

A proposal of law changing certain laws in order to prevent the use of financial sector for tax fraud, amending for example the General Tax Code and the Goods and Services Tax Act, has been recently published on the websites of the Government Legislation Centre.

 

The most important changes suggested in the proposal are focused in principle on the two issues, i.e. control of financial operations and establishment of an official list of VAT active, non-registered, deleted or restored entities. Below we present the main assumptions of changes and their effects for taxpayers/taxable persons.

 

  1. More control of financial operations

 

The legislator plans to add section IIIB titled “Prevention of the use of financial sector for tax fraud” to the General Tax Code.

 

The law is to set up the so called STIR – an information and communication technology system of the clearing house, used to process data in order to prevent the use of activities pursued by banks and cooperative credit unions (SKOKs) for purposes connected with tax fraud, including to analyse risk, provide information and request account blockade, containing technical solutions that will enable safe and proper performance of activities, especially the protection of legally protected secrets, including necessary level of access control security measures, authorisation and separation of information exchange channels.

 

According to the proposal, the clearing house (KIR – National Clearing House) is to make the analysis of risk the results of which, including among others account number, holder’s tax identification  number (NIP) and percentage risk ratio of using the bank or SKOK for purposes connected with tax fraud, are to be provided to the Head of the National Tax Administration (KAS), automatically, at least once in every 24 hours. It will be possible for the Head of KAS to obtain, against payment, also data that were used to analyse the risk. Such data include among others data from the Central Register of Taxpayers (CRP-KEP), data from the list of entities non-registered/deleted/restored as a VAT taxable person, data received for the purpose of exchanging payment orders and determination of mutual receivables resulting from such orders (including data constituting banking secret). When analysing the risk, the clearing house is to take into account in particular the following criteria:

  • economic – assessment e.g. whether the transaction is unjustified by the nature of  conducted activities,
  • geographic – assessment whether transactions are effected with entities from countries where tax fraud is frequent,
  • subject matter related – assessment whether business activities conducted by the entrepreneur are high risk activities susceptible to tax fraud,
  • behavioural – assessment whether any untypical, in the given situation, actions by the entrepreneur are in place,
  • connections related – assessment whether there are any connections with entities potentially involved in tax fraud.

 

The first information about the results of risk analysis is to be provided by KIR within 60 days of the date of entry of the amending law into force (i.e. within 67 days of the date of its publishing).

 

In the event that, among others based on the results of the risk analysis, the head of KAS may suspect that the account in question is used for tax fraud purposes, he may cause that the entrepreneur’s account be blocked for maximum 72 hours, with the possibility of extension of up to maximum 3 months. While the account is blocked, the Head of KAS may obtain detailed information about the blocked account, including about the parties and amounts of the transactions, contents of documents, including the account balances and turnovers. In justified circumstances police and prosecution will be notified that a crime may have been committed. Taxpayers will have the right to claim compensation under the Civil Code for damage inflicted as a result of unlawful blockade request or its extension.

What is important, if a return or return correction is filed or a decision specifying or setting a tax liability is issued while the account is blocked, the Head of KAS will issue a decision that the funds from the account be transferred by the bank (or SKOK) to cover the tax arrears and default interest.

 

II. List of VAT active, non-registered, deleted and restored entities

 

The amendment of the Goods and Services Tax Act will regulate the issue of tax authorities keeping a list of VAT active payers, which to date has not been covered by any regulations. From the beginning of the current year, taxable persons could verify the status of their contracting parties on the Tax Portal kept by the Ministry of Finance, however, without any guarantee that information so obtained will have any value of evidence in the event of any control by tax authorities – we will not find any authorisation for such conduct or for the Tax Portal itself in the existing regulations. Thanks to the amendment this gap is to be finally closed. Changes implemented to the VAT Act are to impose on the Minister of Finance the obligation to keep electronic lists of:

  • entities which have not been registered as VAT taxable persons or which have been ex officio  deleted from the register as a VAT taxable person,
  • entities whose registration as a VAT taxable person has been restored.

 

The scope of data placed in the lists will include not only names and surnames of owners (shareholders) and company name but also names and surnames of persons authorised for representation, including commercial proxies. Apart from that, disclosed data will cover PESEL, NIP, REGON, KRS numbers and addresses of registered office/residence and even fixed place of business, as well as legal grounds for refusal to register or delete from the register as a VAT taxable person. According to the proposal, the lists will cover entities which were deleted, restored or refused registration starting as of 1 January 2015.

 

In accordance with the assumptions of the proposal, the lists are to enhance the safety of economic trade, facilitating verification of the contracting party’s credibility.

 

In addition, together with the entry of the amendment into force, it will be possible for the head of a tax office to refuse to register the entity as a VAT taxable person also when there is a suspicion that the objective of the entrepreneur is to use banks (or SKOKs) for purposes connected with tax fraud within the meaning of the new section IIIB to the General Tax Code discussed above. The same reason may constitute a premise for deletion from the register of VAT taxable persons, provided that in such situation registration may be restored without the need to file an update return, if a taxable person is able to prove that his activities are not conducted with an intention of tax fraud or if other circumstances or evidence are disclosed showing that no such intention is in place.

 

Both lists are to be available in the Public Information Bulletin of the Ministry of Finance.

 

The law is to enter into force within 7 days of its publishing.

On the date of publishing of this article, the proposal is under public consultations.