This principle, which states that doubts should be resolved in favour of the taxpayer, is set out in Article 2a of the General Tax Code and applies only in cases involving vague regulations. In practice, this leaves the tax authorities with considerable leeway for arbitrary application in proceedings where factual findings are crucial.
For this reason, work is underway to extend the application of the principle to situations where factual uncertainties remain after evidence-taking proceedings.
In other words, if the authority cannot establish with certainty which of the equivalent versions of events established in the proceedings is true, it should accept the one that is more favourable to the taxpayer. Let’s take a look at how this could work in practice.
In dubio pro tributario, or the principle of resolving doubts in favour of the taxpayer
Example:
The tax office is carrying out a procedure against a trader suspected of erroneously settling revenue. Following an analysis of the documents, two possible scenarios remain:
- In the first, the trader received revenue in connection with a loan agreement that they concluded
- In the second, the revenue represents payment for a service rendered which the taxpayer did not include in their records, signifying an understatement of income
As we can see here, one situation is clearly advantageous for the trader, while the other incriminates him. If it is not possible to prove which version is true, the authority should accept the one favourable to the taxpayer.
Exceptions to the principle
The draft also lists situations in which the extended principle will not apply:
- When the proceedings involve parties with conflicting interests, or when the outcome may affect the interests of third parties
- When separate provisions require a party to prove certain facts, such as in tax relief or tax exemption cases
- When an important public interest, including a significant state interest, is opposed to the application of the principle
The broad range of exceptions may therefore cause problems when the new regulations are applied. For example, the concept of important public interest is rather vague and will be made more specific on a case-by-case basis. This means that, even if there are unresolved doubts about the facts, taxpayers will not be protected if the tax authorities invoke important public interest in a given case.
The amendments to Article 122 §2 of the General Tax Code will come into force 14 days after their announcement, suggesting that the legislature wants this guarantee to take effect as soon as possible.
Implications for taxpayers
According to the Ministry’s assumptions, introducing these changes may increase taxpayers’ sense of legal certainty and enable them to improve their position in tax proceedings. For professional attorneys, it may also mean better protection of their clients’ interests in proceedings with the tax authorities.
However, there is a concern that this principle may be waived in a number of cases, including those of important public interest. Without a precise definition of the scope of this exception, there is a risk of abuse by the authorities.
The UDER3 draft – is this a revolution in the General Tax Code? New vacatio legis rules
Another proposed change is the extension to six months of the standard vacatio legis period, i.e. the period between the announcement of new tax regulations and their coming into force. Currently, according to the case law of the Constitutional Tribunal, the vacatio legis for tax regulations is generally at least one month.
However, this is to apply only to tax laws containing solutions disadvantageous to taxpayers or other tax law subjects (i.e. also remitters, collectors and legal successors).
What is meant by solutions disadvantageous to taxpayers?
The explanatory memorandum to the draft law lists examples of solutions that are disadvantageous to taxpayers, which should trigger the application of the mandatory 6-month vacatio legis:
- Increasing the tax burden
- Restriction of taxpayers’ rights
- Changing the applicable taxation rules
This does not mean that it is only in these cases that taxpayers should expect an extended vacatio legis – the list of examples is open-ended.
Exceptions from the principle
The draft also specifies two situations in which the legislature may derogate from this principle:
- When motivated by an important public interest
- When it is necessary to transpose or implement provisions of European Union law
The reasons for such derogation must be stated in the explanatory memorandum of the draft law.
However, as in the case of the extension of the in dubio pro tributario principle, the legislator uses, among other things, the vague concept of important public interest, which allows for the exclusion of the legitimate principle of extended vacatio legis. This means that certain tax changes, even those that are disadvantageous to citizens, will still be able to be introduced via a faster legislative route.
Implications for taxpayers
The introduction of the changes is intended to allow taxpayers time to familiarise themselves with the proposed rules and make any necessary adjustments.
However, concerns may arise regarding the exceptions to the new principle, including the potential for the new rules to be introduced at an accelerated pace in cases of important public interest. In addition, the Ministry of Finance has not opted for a one-year vacatio legis in cases where changes in tax legislation require costly and time-consuming adjustments to IT systems, while, as is well known, even 12 months is often insufficient time to adapt to new regulations in such projects.
Summary
The planned changes are a step towards making the Polish tax system more stable. However, as is often the case, the legislature has diluted legitimate ideas by introducing unspecific, vague concepts and numerous exceptions.
Can the Ministry of Finance’s proposals therefore be considered the beginning of the end of the ‘survival school’ approach to taxation? Perhaps. First, though, we should carefully observe what happens to the drafts at subsequent stages and then see how the new regulations are applied in practice.
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Agata Dziwisz-Moshe
