The government draft act amending the goods and services tax act and banking law has been introduced to the parliament. The bill is in line with the tax changes successively introduced by the Ministry of Finance. The aim of the proposed solutions is to simplify the settlement of VAT by taxpayers - the so-called Slim VAT 2 (Simple Local And Modern VAT) package.
In the article The Ministry of Finance presented a package - SLIM VAT 2, we described the main concept of the changes. Our tax experts, Jarosław Szajkowski and Łukasz Woźniak, took part in the pre-consultation and presented their comments on the proposed changes. We are pleased to announce that some of our experts' comments have been taken into account.
The most important elements of the planned amendments we present below.
Art. 22 sec. 2e
The aim of the change is to introduce a regulation that, in the case of export of goods and intra-Community supply of goods, would determine which delivery should be assigned the shipment or transport, if in a chain transaction the entity organizing the transport is not the buyer who also supplies the goods or the intermediary entity, but the first supplier (i.e. first entity in the chain) and last buyer (i.e. last entity in the chain). In the case of the export of goods and the intra-Community supply of goods, that are dispatched or transported from Poland to the territory of a third country or from the territory of one Member State to the territory of another Member State by:
- the first supplier – shipment or transportation is allocated to its delivery;
- the last purchaser – shipment or transportation is allocated to its delivery.
Art. 29a sec. 15a, art. 30a sec. 1a and art. 86 sec. 19c
The aim of the proposed change is to regulate the rules concerning the period in which the taxpayer should settle the adjustment lowering the tax base in the case of the import of services, intra-Community acquisition of goods, and the supply of goods for which the buyer is the taxpayer. If the correction is caused by reasons that arose already at the stage of concluding a given transaction (e.g. incorrectly specified price, quantity), it should be settled in the tax settlement for the period in which the original transaction was settled (retrospective correction). In the case where the adjustment is caused by reasons that arose after the transaction (for example, new circumstances of the transaction, such as granting an additional discount, etc.), the adjustment should be made "on an ongoing basis" in the tax settlement for the month in which the reason for the reduction of the tax base occurred.
Art. 33a sec. 6a and 7
The proposed change is aimed at enabling the taxpayer settling the tax on the import of goods directly in the correct tax return if the taxpayer did not settle this tax in the original return. The taxpayer will be able to submit an appropriate correction of the declaration within 4 months after the month in which he was to settle the tax on the import of goods.
Art. 43 sec. 10 point 2 and art. 43 sec. 11
In art. 43 sec. 1 point 10 of the VAT Act, the tax exemption includes delivery of buildings, structures or parts thereof, except when:
- the delivery is made within or before the first settlement,
- a period of fewer than 2 years has elapsed between the first settlement and the delivery of the building, structure, or parts thereof.
However, the regulations provide for the possibility of resigning from the tax exemption. One of the conditions for resigning from the tax exemption is submitting an appropriate declaration to the tax office competent for the buyer. Currently, the parties of the transaction must submit a joint statement no later than the day before the delivery of the property. The planned change introduces the possibility of submitting a joint statement on the choice of taxation of the delivery in accordance with:
- the current solution – before the date of delivery of these objects - to the tax office competent for their buyer, or
- the proposed additional solution – in the notarial deed concluded in connection with the delivery of these objects.
Art. 86 sec. 10b
The changes are aimed at modifying the condition consisting in setting a deadline according to which the application of the right to deduct depends on declaring in the tax return the tax due for intra-Community acquisition of goods within three months from the end of the month in which, in relation to the acquired goods, a tax obligation arises - this amendment implements the judgment of the CJEU of 18 March 2021 in case C-895/19 A.
According to the new provisions the right to reduce the amount of output tax by the amount of input tax, in the case of intra-Community acquisition of goods and other transactions settled according to reversed charge mechanism, will arise in the settlement for the period in which the tax obligation arose in relation to the purchased goods or services, provided that the taxpayer takes into account the tax amount due for these transactions in the tax declaration in which he is obliged to settle this tax.
This amendment formally eliminates the obligation to use the so-called open pattern for the described transactions and means a return to the settlement methods applied before 1 January 2017.
Art. 86 sec. 13
Currently, the taxpayer may deduct the input tax by correcting the tax return for the period in which the right to reduce the output tax arose, but not later than within 5 years from the beginning of the year in which the right to reduce this tax arose, if he did not deduct the input tax on time.
The proposed change provides that in the event of exceeding the period for settling a purchase invoice "on an ongoing basis", the taxpayer will be able to correct the tax return:
- for the period in which the right to reduce the amount of output tax was established, or
- for one of the next three settlement periods, and in the case of a taxpayer who settles quarterly for one of the next two settlement periods - after the settlement period in which the right to reduce the amount of output tax arose
- but not later than within 5 years from the beginning of the year in which such right arose.
Art. 89a and Art. 89b
The so-called "bad debt relief" provides that if the buyer fails to meet its obligations towards the supplier, the supplier is entitled, under certain conditions, to reduce the amount of output tax on the amounts unpaid by the buyer.
The draft act removes some of the conditions necessary to qualify for bad debt relief. It allows also to apply this institution in case of unpaid transactions with natural persons - consumers and tax-exempt VAT payers.
For these categories of taxpayers, it is possible to use the bad debt relief after the creditor proves the existence of the debt - if the claim has been confirmed by a legally valid court decision and directed to enforcement proceedings.
It was proposed to extend the deadline for using the above mechanism from 2 to 3 years from the date of issuing the invoice documenting the claim, counting from the end of the year in which it was issued. However, the condition that the creditor should still be registered as a VAT payer on the day preceding the date of submitting the correction of the tax return has not been changed.
Currently, the draft act is intended for the 1st reading in the Parliament. The entire legislative process will probably take several months. According to the draft, most of the tax changes will enter into force on 1 October 2021. Some changes are to enter into force on 1 January 2022.