The government on planned changes in VAT regulations
New changes in VAT tax coming up. Polish government has come up with some new ideas for closing the VAT gap. The amendments are planned to come into force on 1 January 2017.
The Ministry of Finance decided to keep current goods and services tax rates at the same levels as in 2016 (0%, 8% and 23%). When the current rates were established, it was said the situation is only temporary. However, in the present economic environment, lowering the rates would mean cutting down state revenue to the extent that cannot be accepted. Therefore, Poles need to get used to one more year with higher VAT.
The key changes the government wants to introduce concern closing the VAT gap and fighting VAT fraud. One of the ways to achieve that is reverse charge mechanism. Normally, VAT is paid by the buyer in a transaction. With reverse charge mechanism, the situation is different. It is the seller who is obliged to settle the goods and services tax arising from the performed transaction.
In the areas where the mechanism was introduced, state revenue went up. Therefore, the solution is going to be implemented with respect to an extended range of transactions. It will apply to trade in processors and hard drives, as well as construction services.
What is more, the lawmakers decided to introduce some restrictions in VAT registration. The group of entities entitled to quarterly tax settlements is to be limited. Only the so-called small taxpayers will have the option to submit their tax returns on a monthly basis. Losing company VAT number is to be easier and happen quicker than today.
Penalties imposed on unfair taxpayers will be more severe. Issuing “empty” invoices documenting fake transactions will entail a penalty in the amount of 100% of due tax.
From next year, taxpayers will be obliged to file their VAT tax returns and VAT UE summary information electronically. Filing the documents online has been available for some time and is popular among businesses in Poland. However, this is soon going to be a necessity, not an option.
The deadline for paying tax refunds will be extended. Tax authorities will have more time to determine whether the submitted refund claim is legitimate.
All these changes are to result in better tax collection and higher budget revenue. The goods and services tax is the main source of income for the budget.