Post by Marta Szafarowska on Jan 6, 2009 22:55:09 GMT 4
Amendments to Polish VAT Act
For last couple of months Polish parliament has been debating the amendments to the VAT act. Some of the amendments are expected to come into force from December 1 2008 and the rest – from January 2009. The changes to be introduced are quite revolutionary.
Call-off stock
Today, if a supplier from another EU member state would like to maintain a consignment stock in Poland and supply goods to Polish recipients from such a stock, he is obliged to register for VAT in Poland and declare VAT on intra-Community acquisition. This rule is to be changed – the VAT on intra-Community acquisition in such a case will be declared by the Polish purchaser when the goods are withdrawn from the consignment stock. Therefore, the foreign supplier will no longer be required to register for VAT in Poland.
However, it should be noted that it does not apply to those foreign suppliers that are already registered for VAT in Poland. Moreover, the simplification will apply only if the goods stored in the consignment stock in Poland are used by the Polish purchaser for production purposes or for provision of services by this taxpayer. Basically, it means that the simplification will not apply where the Polish purchaser acts as a distributor of the purchased goods (i.e. foreign supplier will be still required to register for VAT in Poland).
Postponed accounting
Even if the importer of goods is entitled to apply simplified customs procedures, he is required to pay the VAT due at importation. The VAT is then recovered through the monthly VAT return. Such structure negatively affects the taxpayer's cash flow. Proposed changes envisage that in some cases where the taxpayer is entitled to apply a simplified customs procedure, VAT due at importation will be declared in the VAT return. Such a solution will allow the taxpayer to avoid actual payment of the VAT on the imported goods. Provided that the taxpayer is entitled to deduct input VAT he will be able to declare the VAT due and VAT to be deducted in the same VAT return.
Sanction
Since VAT was introduced in Poland in 1993 taxpayers have been penalised for any understated VAT liability (or overstated VAT to be refunded or carried forward). The penalty amounts to 30% of the understated (or overstated) amount. It is proposed that the sanction will be abolished. It is planned to be effective from December 1 2008 - all final tax assessment decisions issued after that day should not bear any sanction. It also means that if the taxpayer makes a mistake in his VAT settlement, he will be obliged to pay the understated liability together with penalty interest (15% per annum). He may also be penalised based on the provisions of the penal fiscal code. However, the sanction of 30% will no longer be a threat.
The above does not cover all changes that will be introduced. There will also be a VAT exemption of immovable property with option to tax such transactions, modification of the terms of VAT deduction and refund and many more. It is expected that the amendments will significantly modify the position of the Polish VAT taxpayers.
Marta Szafarowska (marta.szafarowska@mddp.pl)
For last couple of months Polish parliament has been debating the amendments to the VAT act. Some of the amendments are expected to come into force from December 1 2008 and the rest – from January 2009. The changes to be introduced are quite revolutionary.
Call-off stock
Today, if a supplier from another EU member state would like to maintain a consignment stock in Poland and supply goods to Polish recipients from such a stock, he is obliged to register for VAT in Poland and declare VAT on intra-Community acquisition. This rule is to be changed – the VAT on intra-Community acquisition in such a case will be declared by the Polish purchaser when the goods are withdrawn from the consignment stock. Therefore, the foreign supplier will no longer be required to register for VAT in Poland.
However, it should be noted that it does not apply to those foreign suppliers that are already registered for VAT in Poland. Moreover, the simplification will apply only if the goods stored in the consignment stock in Poland are used by the Polish purchaser for production purposes or for provision of services by this taxpayer. Basically, it means that the simplification will not apply where the Polish purchaser acts as a distributor of the purchased goods (i.e. foreign supplier will be still required to register for VAT in Poland).
Postponed accounting
Even if the importer of goods is entitled to apply simplified customs procedures, he is required to pay the VAT due at importation. The VAT is then recovered through the monthly VAT return. Such structure negatively affects the taxpayer's cash flow. Proposed changes envisage that in some cases where the taxpayer is entitled to apply a simplified customs procedure, VAT due at importation will be declared in the VAT return. Such a solution will allow the taxpayer to avoid actual payment of the VAT on the imported goods. Provided that the taxpayer is entitled to deduct input VAT he will be able to declare the VAT due and VAT to be deducted in the same VAT return.
Sanction
Since VAT was introduced in Poland in 1993 taxpayers have been penalised for any understated VAT liability (or overstated VAT to be refunded or carried forward). The penalty amounts to 30% of the understated (or overstated) amount. It is proposed that the sanction will be abolished. It is planned to be effective from December 1 2008 - all final tax assessment decisions issued after that day should not bear any sanction. It also means that if the taxpayer makes a mistake in his VAT settlement, he will be obliged to pay the understated liability together with penalty interest (15% per annum). He may also be penalised based on the provisions of the penal fiscal code. However, the sanction of 30% will no longer be a threat.
The above does not cover all changes that will be introduced. There will also be a VAT exemption of immovable property with option to tax such transactions, modification of the terms of VAT deduction and refund and many more. It is expected that the amendments will significantly modify the position of the Polish VAT taxpayers.
Marta Szafarowska (marta.szafarowska@mddp.pl)