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SLIM VAT – Further amendments to the tax on goods and services

2020-08-17

The Ministry of Finance have prepared another set of proposals for amending the tax on goods and services – the so called SLIM VAT (an acronym based on the English words: simple, local and modern). They concern primarily simplified procedures for invoicing, exports and rules for currency exchange rate calculations. The SLIM VAT concept is a result of an audit of VAT Act provisions carried out by the Ministry. The package has been created primarily with small and medium-sized businesses in mind and sets out to limit the formalities involved in VAT settlements.

Changes in correcting invoices

As regards the invoices correcting in-minus, the formal requirement will be removed that the proof of receipt of the correcting invoice by the purchaser of goods or services be obtained. A taxpayer will be entitled to reduce the taxable base and the amount of output VAT already in the period in which the correcting invoice is issued. However, he should be in possession of relevant documentation confirming the fact that the terms of the transaction have been agreed upon with the purchaser of the goods or services. The purchaser will be required to correct the amount of input VAT in the same period.

Moreover, new provisions will be added to the VAT Act clearly indicating the manner of settling in-plus correcting invoices.  Under the new regulations, the settlements will be made each time in the period in which a correcting invoice is issued.

Facilitations for exporters

According to the proposals of the Ministry of Finance, the term for exporting goods with a 0% export rate will be extended from two to six months. In the Ministry’s opinion, the change will contribute to improving the situation of exporters and solve the problem of long-term supplies. For, if goods are not exported within a certain period of time, the taxpayer now has to replace the 0% rate with a higher one – i.e. 23%.

Unification of applied exchange rates

The taxpayer will now be in a position to apply the currency exchange rates applicable to settling transactions in income tax for the purposes of VAT settlements. Currently, if a taxpayer provides e.g. a construction B2B service, the proper exchange rates for the purposes of VAT (i.e. on the date preceding the issuance of the invoice) and CIT/PIT (i.e. on the date preceding the performance of the service) are set separately. Whereas following the changes, it will be possible to apply a single exchange rate, common for both taxes.  

Financial benefits

Other facilitations for businesses include:

  • Extension of the deadline for current VAT settlements from three to four months;
  • Possibility of deducting VAT from invoices for accommodation services purchased in order to resell them;
  • The gift limit  being raised from PLN 10 to PLN 20.

The Ministry of Finance expects that the new regulations will come into force in the first months of 2021. According to the Ministry’s declarations, a relevant bill will soon find its way to the Sejm.

Anna Skórska, Tax Consultant, ATA Tax Sp. z o.o.

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