Uncategorized

Striking off the VAT payers from the relevant register will be possible without undertaking any verifying operations and – additionally – when the data given in the application for registration are untrue, and if the entity or their agent does not turn up for the summons of tax authority or tax inspection authority.

In addition, Article 96 subparagraph 9a was added to the VAT Act setting out five new cases in which taxpayers will be struck off from the VAT taxpayers register ex officio. This will apply to entities that:

1) suspended carrying out their business pursuant to the provisions on freedom of establishment for a period of at least 6 months  (subject to Art. 96 subparagraph 9b and 9c of the VAT Act provides a possibility to report with a Head of the Revenue Office a longer period of suspension of business.

In such cases, the Head of the Revenue Office shall not strike off the taxpayer from the register or return its registration for a period indicated in the notification. In such a case, the taxpayer shall be registered again without any necessity to report any registration request on the day when the business activities are reopened with such a status as it had at the moment of suspension,

2) obliged to file VAT-7/VAT-7K returns, have not filed such returns for 6 subsequent monts or 2 subsequent quarters (unless as a result of summoning by the Head of the Revenue Office, the taxpayer proves that it runs business to be taxed or files the return immediately (Art. 96 subparagraph 9d of the VAT Act),or

3) filed for 6 subsequent months or 2 subsequent quarters VAT-7/VAT-7K returns, in which they indicated no sale or purchase with amounts of tax to be discounted  (unless the failure to show sales or purchases arises, in accordance with the explanations of the taxpayer, from the specificity of the business run – Art. 96 subparagraph 9e of the VAT Act,

4) issued invoices or corrected invoices which did not document the real operations or else, so called „empty invoices” (unless, issuance of such invoices was the result of  an error or took place without the taxpayers knowledge ( Art. 96 subparagraph 9f of the VAT Act),

5) running business, they knew  or had justified reasons to suspect, that they participated in the procedure of fraud or tax law breach with the purpose to gain undue material benefits to the detriment of the State budget

The addition of provisions to set out the principles of restoring the registration of the taxpayer will accompany this with no necessity to file registration application (see Art. 96 subparagraph 9h and 9i of the VAT Act added on  1^st January 2017).

On  1^st January 2017, Art. 96 subparagraph  10a of the VAT Act will be added –  this provision will facilitate cancelling from the register of VAT taxpayers, the  active taxpayers who/which carry out exclusively tax-released operations, with a simultaneous leaving them in the register with the status of VAT released taxpayers in the situation when those taxpayers indicate in their tax returns for 6 subsequent months or 2 subsequent quarters, exclusively  tax-released sale pursuant to Art. 43 of the VAT Act, but have not filed in the Revenue Office the relevant application to update the data.

The above shall not relate to the situation when it results from the explanations filed by the taxpayer, that the  failure to show in the returns the sales other than that tax-released  pursuant to Art. 43 of the VAT Act is related to the specificity of the business run and not to abandoning the carrying out of sale other than tax-released (see Art. 96 subparagraph 10b of the VAT Act added as on 1^st January 2017). In such a case, it will be possible also to restore the registration of the taxpayer as an active VAT taxpayer , with no necessity to submit the application  (see; Art. 96 subparagraph 10c of the VAT Act added as on 1^st January 2017).

...

The right to deduct – as amounts of input tax – the amounts of output tax, which were not recognized in the relevant VAT return, is to function backwards only when the amount of output tax is recognized in the relevant VAT return within three months from the end of the month, in which tax liability arose in relation to the purchased goods and services. In the case of subsequent recognition of the abovementioned output tax amounts  in the relevant VAT return, the right to deduct the input tax on these amounts will arise currently (i.e. in the settlement for the current period of time with reference to which the deadline to submit the tax return has not expired).

...

The Act repeals Article 43 subparagraph 13 of the VAT Act and Art. 43 subparagraph 14 referring thereto. As an exception, this change is to come into force on 1st July 2017. (Not 1st January 2017.

...

Another extension refers to the list of goods in Attachment 11 to the VAT Act – in addition will be subject to tax by the reverse charge mechanism the following: silver, gold and platinum – unwrought or in semi-manufactured forms, or in powder form; silver, clad with gold, processed not further than semi-jewellery and its parts and other jewellery and its parts, of gold of hallmarked below 325 thousandths and silver clad with precious metal -exclusively pieces of jewellery and other parts of gold jewels of the above hallmark and silver, i.e. unfinished or incomplete jewellery and distinct pieces of jewellery, including coated or clad with precious metal; processors, provided that it shall only apply to supplies carried out after exceeding the limit of PLN 20,000 net.

...

Since 1^st January, 2017, a majority of construction works (classified on the basis of PKWiU2008 (Polish Standard Classification of Economic Activities) used for tax purposes, in groupings 41-43) will be covered by reverse charge mechanism. The new catalogue of services covered by the reverse charge mechanism will be given in Annex 14 to the VAT Act.

The application of the reverse charge mechanism to new services covered by this mechanism will depend on an additional condition, i.e. the provider of these services will have to act as a subcontractor. In the case when the taxpayer is the main contractor of these services, the reverse charge mechanism will not be applied.

...

The entities, whose turnover value in the previous year did not exceed PLN 200,000 (or its equivalent fixed pro rata to the period of the taxpayer’s activities, if they started up business in the course of the year) may benefit from tax exemption under Article 113 of the VAT Act. In the previous years, the threshold amounted to PLN 150,000.

...

The current rates will be in force for a further 2 years.

...

The limit of shares or stocks from which the duty to prepare tax documentation arises was increased from 5% to 25%. From 1st January 2017, the duty to prepare tax documentation applies to the following  entities:

1) which run a non-agricultural business or special agricultural production, who/which in the fiscal year and in the year preceding the tax year were running accounting ledgers:

1. a) who/which in the tax year had transactions with related entities of a significant

impact on the amount of their income (loss), or

1. b) who/which in the tax year recognized in the accounting ledgers other events, whose

terms were set out (or imposed) with related entities, of a significant impact on the

amount of their income (loss),

– whose revenues or costs, as understood by the provisions on accounting, established based on the accounting ledgers run exceeded in the year preceding the tax year, the equivalent of Euro 2,000,000 (or else in the case of tax payers starting up non-agricultural business or special agricultural production – from the month following that when  revenues or costs, as understood by the provisions on accounting, established based on the accounting ledgers run exceeded the equivalent of Euro 2,000,000 or,

2) which pay, directly or indirectly, the amounts due to an entity, having its place of residence, registered office or management board in the territory or in the country that applies harmful tax competition, arising from transactions or other events recognized in the accounting ledgers if the total amount (or its equivalent) of the contract or the total amount due in the fiscal year actually paid in the tax year exceeds the equivalent of EURO 20,000, or

3) which conclude with an  entity being resident, having  registered office or its management board in the territory or in the country that applies harmful tax competition:

1. a) a contract of partnership not being a legal person, if the total value of the contributions brought by shareholders exceeds the equivalent of EUR 20,000 or
2. b) a joint venture contract or another contract of a similar nature, in which the value of the project to be jointly implemented, set out in the contract or else when lacking in the contract but anticipated at the moment the contract is concluded, exceeds the equivalent of Euro 20,000.

The tax documentation is to be made for a given tax year, in the deadline for drawing up financial statements for a given year. If in a given year, the duty to draw up the documentation arises, it passes to the next year, regardless of the value of turnover in the other year. The taxpayer will declare whether they were under the obligation of drawing up tax documents, and whether such documentation was drawn up together with the annual CIT / PIT returns.

 

The tax documentation shall contain:

 

1) a description of the transactions or other events with the particulars of the parties engaged in the transactions, the assets involved, the risks borne,

 

2) a description of such  taxpayer’s financial particulars to make a settlement comparison possible with the data, arising from the approved financial statements, if the obligation to draw them up results from the accounting regulations, binding the taxpayer or the company;

 

3) the information on the taxpayer, including a description of:

1. a) their organizational and management structure,
2. b) the object and scope of their business,
3. c) economic strategy undertaken, the transfers between related parties of economically important functions, assets and risks, affecting the taxpayer’s income (loss) included which were carried out in the fiscal year or in the year preceding the fiscal year,
4. d) the competitive environment;

 

4) documents, in particular:

1. a) contracts, agreements concluded between related parties or other documents of transactions or other events referred to in Article 25a subparagraph 1 of PIT Act or Art. 9a subparagraph 1 of CIT Act, a contract of partnership not being a legal person, a joint venture contract or similar ones, that document the rules for granting rights to shareholders (the contracting parties) to participate in the profits or in losses,
2. b) understandings on income tax concluded with tax offices of countries other than the Republic of Poland related to transactions or other events referred to in subparagraph 1, in particular, earlier price understandings. Additionally, in the event of large taxpayers ( with turnover in excess of the equivalent of EURO 10,000,000 and 20,000,000) the provisions provide for additional data. These entities will have to draw up and file together with the tax return an annual simplified report on transactions with related parties or other events that occur between related parties, or with reference with which the amounts shall be paid directly or indirectly to a person having its place of residence, seat or management board in the territory or in a country which applies harmful tax competition.

...

As on 1^st January, 2017, the catalogue of eligible costs will be extended by costs of obtaining and maintaining a patent, utility model right, the right from the registration of industrial design, incurred by the taxpayer being a micro-entrepreneur, small or medium-sized enterprise set out in added Article 18d subparagraph 2 point 5 of the CIT Act as understood by the provisions on the freedom of establishment. In addition, these entities will be able to reduce the tax base in the annual calculation by higher limits of expenses – 50% of eligible costs. For large enterprises, these limits will amount to 50% of  costs in the case of labour costs of those employed  in order to carry out research and development work, 30% in the case of other eligible costs. These expenses can be settled over the subsequent 6 years. In the case of start-ups  which do not report income or have too small an income to avail themselves fully of the tax relief for costs of research and development incurred, a solution was introduced to grant reimbursement of eligible costs, in the part that was not covered by the tax relief in a given year due to the lack of taxable income or excessively low income. This solution means the grant of reimbursement of a part of eligible costs. The decision to choose this solution will belong to the taxpayers.

...

In both the tax laws, a catalogue of incomes gained in the territory of Poland was introduced. The range of this catalogue does not differ from that which was in force in 2016. The basic change is the recognition that the income is gained in the territory of the Republic of Poland from settled receivables, those made available, paid out or withheld, by individuals, legal persons or entities without legal personality, having a place of residence, registered office or management board in the territory of the Republic of Poland, regardless of the place where  the contract was concluded and the performed. This means that the contractor does not have to provide the service physically in Poland to have it taxed in Poland. The remuneration for services referred to in Art. 29 of the PIT Act and art. 21 of the CIT Act  is subject to tax in Poland (personally done artistic, literary, scenic, scientific, coaching, educational, journalist activities, incomes of management board, supervisory board members, revenues from management contracts, contracts for company management, licences, property rights, know-how,  consulting, accounting, market research, legal services, advertising, management and control, data processing, recruitment of personnel, provision of guarantees and similar services).

...