Ministry of Finance’s new weapon against tax defaulters

A big change is coming for taxpayers. Polish Ministry of Finance has new plans to combat tax evasion and identify dishonest taxpayers. Polish edition of Forbes magazine called the upcoming solution revolutionary.

Consolidated Control File – this is the name of the new tool that is to bring tax investigations to the next level. In a few years’ time, all companies keeping their books in electronic form will be under obligation to prepare such files.

Plans to introduce Consolidated Control File were announced in December. The file will allow fiscal authorities are to get in possession of much more data than before. This will allow fiscal compliance checks to be more thorough and quicker.

Tax authorities carry out inquiries to find out whether taxpayers comply with their statutory obligations and pay the right amount of tax or maybe they engage in some illegal activities, such as tax evasion or VAT fraud.

The new tool is to enable the Ministry to close the gap in VAT tax collection, i.e. the difference between the expected and actual income from goods and services tax settled by entrepreneurs.

Polish budget is to gain additional 15 billion PLN. The funds are much needed, as budget deficit for 2016 is estimated at 54.7 billion PLN.

The file is to contain the company’s financial and accounting data, such as information on sales and purchases, VAT registers or bank statements. Most importantly, all taxpayers will submit information in the same format.

The data will be thoroughly examined by tax experts, who will look for any inconsistencies. Tax compliance check are to take less time and be more effective. The authorities are on the lookout for “blank” invoices and fictional transactions.

Consolidated Control File is not a Polish invention. The system has already been implemented in such countries as Portugal and France, and with good effect.

The change will surely be a challenge both for the taxpayers and the authorities. Both parties will need to adapt or introduce new computer software. The Ministry has not revealed how many officials will be delegated to collect and analyse the files.

From July 2016, all data will be presented to tax authorities electronically. However, this will only apply to big taxpayers. Medium and small enterprises will be obliged to submit Consolidated Control Files most likely from July 2018.