The beginning of 2020 has seen changes mainly in the VAT area with the common denominator being the aim of stopping tax evasion. Please see below for the overview of the most important changes.
1. Amendments of VAT 2020 in Poland
As of September 2019, a so-called “white list of taxpayers” was introduced to the Polish tax law. All entities registered for VAT purposes in Poland are included in the white list automatically. The main concept of these regulations is to enable verification (with due care) of the contractor’s VAT status (current and historic – up to 5 years back) and its bank account numbers. As regards the bank accounts, new regulations impose an obligation to transfer payments equalling or over PLN 15,000 (gross) to the bank accounts disclosed in the mentioned white list. Starting from 1 January 2020, payment to the bank account which is not included on the white list will result in
- (1) the joint liability of the buyer for VAT arrears of the seller (proportionally related to this particular transaction payment);
- (2) from the income taxes’ perspective: treatment of such expense as a non-tax deductible cost – for these taxpayers who settle income tax in Poland.
These sanctions will not occur in a situation when an entity transferring payment to the bank account not included on the white list notifies a relevant tax authority (within 3 days) of making the payment into other bank account.
Poland:Vat Split Payment
As of November 2019, the Polish Ministry of Finance implemented provisions introducing the mandatory VAT split payment mechanism in the Polish law on VAT. The introduction of the split payment changes the way payments are made, as it is now necessary to split the payment into two amounts – due VAT and the taxable base. If the vendor or the service provider is subject to regulations on the split payment, it will be obliged to have, apart from a regular bank account, a separate, blocked VAT account – these are opened automatically for current accounts. That separate account can be used only to collect VAT from customers, pay VAT to vendors/service providers or pay VAT, CIT, PIT, social insurance contributions, excise and customs duties to tax authorities.
As of 1 January 2020, the amended provisions of the VAT Directive entered into force, modifying the rules Intra-Community chain transactions are taxed (referred to as “quick fixes”). In order to avoid different approaches in different UE countries, a common rule is established, according to which if certain conditions are met, the transport of the goods should be attributed to one particular supply within the chain of transactions.
2. Changes of Income Taxes: CIT and PIT
The withholding tax (WHT) has seen a major overhaul (to be applied from June 2020) – in the case of payments to one contractor, exceeding in one fiscal year PLN 2 million, the WHT remitter will be firstly obliged to pay WHT as per the domestic WHT rate, and then, the taxpayer or the WHT remitter will be able to apply for a WHT refund. There are exceptions allowing for the use of the exemption or the more favourable rate from the DTA. Please note that the entry into force of the abovementioned amendments has been postponed from January 2019 to June 2020.
Moreover, the legislator has introduced the possibility to reduce the tax base by the amount of claim from the commercial transaction that has not been settled or sold, with the reduction being made in the tax return filed for the tax year in which 90 days have elapsed since the payment date specified on an invoice or in a contract. Accordingly, the tax base should be increased by the amount of debt from the commercial transaction that has not been settled, with the increase being made in the tax return filed for the tax year in which 90 days have elapsed since the payment date specified on the invoice or in the contract.
Starting from 1 January 2020, payment to the bank account which is not included on the white list or without obligatory split payment mechanism results in the treatment of such an expense, from the income taxes’ perspective, as non-tax deductible – for these taxpayers who settle income tax in Poland.
All the above provisions have been introduced in the Corporate Income Tax as well as to the Personal Income Tax.
As regards the PIT, the most important amendment concern the reduction of the basic tax rate from 18% to 17% and the introduction of the tax exemption for persons under 26.
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