On 8 March this year, the first reading was held of the bill amending the Value Added Tax Act and certain other acts – i.e. the so-called SLIM VAT 3 (print no. 3025). The bill is expected to enter into force on 1 April 2023, except for the changes to the VAT sanctions, which will enter into force on the day following the date of publication. Below is a list of major tax solutions provided for in the bill.
Increase in the sales limit for small taxable persons to EUR 2,000,000
- The annual turnover limit for those with small taxpayer status will change from EUR 1,200,000 to EUR 2,000,000 (including tax)
- In practice, a larger group of taxable persons will be eligible for the cash method and quarterly VAT settlements.
Clarification of the rules for applying the exchange rate for correction invoices when the original invoice is issued in a foreign currency
- A general rule will be introduced for the conversion of a foreign currency for both “in plus” and “in minus” adjustments, according to which the amount of the adjustment to the taxable base will be converted at the rate of the foreign currency in question applicable before the change
- Where a discount or rebate is applied to a correction invoice relating to supply of goods or services with a taxable amount expressed in a foreign currency, taxable persons will be allowed to make the conversion using one of the following methods:
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- the average exchange rate of the currency in question, published by the National Bank of Poland on the last working day preceding the date of issue of the correction invoice
- the exchange rate published by the European Central Bank on the last day preceding the date of issue of the correction invoice; currencies other than EUR shall be converted at the rate applicable to EUR
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- This solution is intended to clarify the previous rule for the conversion of foreign currency exchange rates in correction invoices.
Designation of a single authority competent to issue binding rate information (WIS), binding excise information (WIA), binding tariff information (WIT) and binding origin information (WIP), and abolition of the fee
- The authority competent to issue and amend WIS, WIA, WIT and WIP at first instance and to hear appeals at second instance will be the Director of the National Tax Information Office
- The list of persons entitled to apply for WIS will be extended to include public entities under public-private partnership agreements and contracting entities under construction work or service concession agreements
- A WIS application form will be developed to standardise WIS applications and streamline their processing
- The WIS application fee will be abolished
- The WIS issuing authority will be able to request, where necessary, documents relating to goods or services constituting a taxable activity. Failure to provide the requested documents in due time will result in the application not being processed, with the possibility of an appeal. There will also be a similar sanction for failure to provide samples of the goods or to pay an advance for required tests or analyses when requested by the authority;
- In practice, the WIS, WIA, WIT and WIP issuing process will be standardised and streamlined at national level.
Abolition of the formal requirement to hold an invoice documenting intra-Community acquisition of goods (WNT) when deducting input VAT thereon
- The holding of an invoice will no longer be a formal condition for the deduction of input VAT;
- Input and output VAT on WNT will always be accounted for in exactly the same accounting period, with the result that VAT on WNT will be completely neutral for taxable persons;
- In practice, the change will remove the need for taxpayers to monitor whether the 3-month time limit for receiving an invoice has been exceeded.
Liberalisation of the conditions for faster VAT refunds for non-cash taxable persons and strengthening the procedural framework for such refunds
- The following reductions will be introduced:
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- the period examined will be reduced from 12 to 6 months when determining compliance with the condition of:
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- the achievement by taxable persons of the total value of sales, including tax, recorded using online or virtual cash registers, for each accounting period and
- keeping records of sales using only cash registers enabling connection and data transfer between the cash register and the Central Repository of Cash Registers (online or virtual cash registers)
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- the threshold for the total value of sales will be reduced from PLN 50,000 to PLN 40,000, including tax, recorded using online or virtual cash registers, for each accounting period
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- In addition, for a period of two years from the entry into force of the amended legislation, taxable persons will be able to use preferential VAT refund conditions, provided that:
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- the percentage of the total value of sales, including tax, recorded with the use of cash registers (online or virtual), in a given accounting period in relation to the total value of sales, including tax, made by taxable persons in a given accounting period, was no lower than 70% (following two years, the percentage will increase to the required 80%)
- the percentage of received payments made using payment instruments, including the use of a credit transfer service, in respect of sales including tax, recorded using cash registers (online or virtual), documented by receipts with a marking that the payment was made using a payment card, via a mobile payment service or a credit transfer service, consistent with the form of received payment, in relation to the total value of sales, including tax, recorded using such cash registers in a given accounting period, was no lower than 55% (following two years, the percentage will increase to the required 80%)
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- In practice, a larger group of taxable persons will be able to use preferential VAT refund conditions.
De-formalisation of the proportion procedures for calculating and deducting input tax
- The obligation to agree on the proportion forecast or the pre-WSS forecast in the form of a report will no longer apply to taxable persons starting a business for the purpose of calculating input tax and to taxable persons starting a business or achieving turnover in the previous tax year below PLN 30,000 for the purpose of deducting input tax
- Instead, taxable persons will be required to notify the head of the tax office of their estimated proportion
- In practice, the procedure for determining the preliminary proportion will become much less formalised.
Increase in the amount enabling the proportion determined by taxable persons to be deemed to be 100%
- The amount of non-deductible input tax, enabling the proportion determined by taxable persons to be deemed to be 100%, in a situation where the proportion exceeded 98%, will be increased from PLN 500 to PLN 10,000
- As a consequence, the number of adjustments reported by taxpayers in their VAT returns will decrease.
The possibility to opt out of an annual adjustment to deducted tax if the difference between the pre-determined proportion and the final proportion does not exceed 2 percentage points
- Taxable persons will be allowed to forego making the adjustment if the difference between the preliminary proportion and the final proportion does not exceed 2 percentage points, and the final proportion is lower than the preliminary proportion. In addition, non-deductible input tax resulting from the difference between both proportions and a multi-year (5- or 10-year) adjustment cannot exceed PLN 10,000
- In practice, there will be a significant simplification of settlements for taxable persons with minor differences between the preliminary and final proportions.
A new, additional possibility for factors to release themselves from joint and several liability in the event of a change in a factor
- Factors will be given a new opportunity to release themselves from liability in the event of a change in a factor by transferring VAT amounts directly to a new factor’s VAT account
- In practice, it will no longer be necessary for the supplier to be involved in the process.
No obligation to print fiscal documents issued via cash registers
- Taxable persons keeping records of sales with the use of cash registers will no longer be obliged to print documents issued using such registers, i.e.: fiscal reports and non-fiscal documents
- This will only apply to online cash registers, including virtual ones
- Taxable persons will thus be allowed to choose whether they decide to keep fiscal reports and other non-fiscal documents in hard copy form or in electronic format only
- Although the introduced solution means that taxable persons will no longer be obliged to print such documents, these will continue to be issued in electronic format
- In practice, this will make it easier and more cost-effective to comply with record-keeping obligations.
Changes to VAT sanctions
- The current VAT sanctions of 15%, 20% and 30% will be replaced with individualized sanction amounts up to a maximum of 30%, 20% or 15%, depending on the circumstances
- The amount of the sanction will be determined by the tax authority based on the nature and extent of a breach of duty leading to an irregularity, the circumstances, nature, extent, amount and frequency of that irregularity and the measures taken by taxable persons to remedy the situation
- As a result, the sanctions imposed by the authority will be more lenient and there will be the possibility of waiving the sanction.
Extension of the list of receivables that can be paid from the VAT account
- The extension covers tax on the extraction of certain minerals, retail sales tax, sugar tax, lump tax on the value of sold production, tonnage tax, miniature alcoholic beverage levy and related interest
- The VAT group will be changed to allow members of the group to transfer funds from their VAT accounts to the VAT account of the group representative
- In practice, the potential risk of a deterioration in the liquidity of taxable persons due to the limited availability of funds held in the VAT account will be mitigated.
Previously proposed amendments to the bill
- The possibility to opt out of issuing an advance invoice and to issue a final invoice only has been moved to the bill introducing the National e-Invoicing System (KSeF)
- The proposal to extend the VAT exemption to include management services of special investment funds (SIFs) has been abandoned.
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