Narrowing the VAT gap has been one of the main priorities for the Polish government since 2015 and is one of the flagship goals of the governing political party ‘Law and Order’. The main reason is economic as VAT revenue constitutes around 40% of the country’s budget. However, this topic is also a national political debate and the Polish parliament is currently preparing to set up an investigative commission for VAT to find out whether the previous government committed VAT abuse as the VAT gap increased during the period 2008-2015.
The Polish government has in previous years taken several concrete steps to narrow the VAT gap. They are not trying to reinvent the wheel, but rather gain inspiration from other countries, mainly within Europe so far.
Here are the main steps taken:
SAF-T (JPK) reporting, July 2016-July 2018
The requirement for SAF-T reporting (in Pl: JPK, Jednolity Plik Kontrolny) was introduced through multiple amendments of the Polish Tax Ordinance. An obligation for monthly reporting of the VAT evidence/register through SAF-T (JPK-VAT) was gradually introduced from 2016 starting with big companies expanding to micro businesses on 1 January 2018 for monthly reports and from 1 July 2018 for reports upon request. There are seven SAF-T logical structures regulated in Poland. Apart from the above-mentioned VAT SAF-T report, which must be actively sent monthly, other SAF-T reports such as invoice data must be provided if requested by the tax authority.
Split payment, July 2018
From 1 July 2018 Polish companies can pay invoices using a split payment. This means the purchaser can pay the VAT direct to the dedicated VAT bank account of the supplier. The supplier has limited rights to using the money in its VAT bank account, the purpose of which is to ensure that their VAT related liabilities are paid. Originally the Polish government wanted to make split payments mandatory from the outset. However, research showed that Polish taxpayers are not yet ready for such a step and therefore incentives for using split payment have been introduced, such as VAT deductions and smoother VAT return procedures. The idea to introduce split payment originated from Italy and Romania, where it was introduced a couple of years earlier.
Central Register of Invoices, planned for 2019
On 4 December 2018 the Polish Ministry of Finance published a bill amending the VAT Act and the Tax Ordinance, aiming at, among other things, introducing the Central Register of Invoices (CRI). The introduction of CRI is planned for 1 July 2019 and will be operated by a Country Fiscal Administration (CFA). The expected result is to gain visibility over VAT-able transactions. Through the register, CFA intends to be able to gather data, analyze it and follow up with taxpayers. The data gathered will be based on VAT SAF-T reports and not directly on actual invoices. The same amendments introduce rules for substituting current VAT SAF-T report (JPK_VAT) by a more detailed report which will replace monthly and quarterly VAT returns (JPK_VDEK), also from 1 July 2019.
With this new political wave, Poland is concentrating on narrowing their VAT gap. This is also a growing trend across Europe with measures such as SII in Spain, RTIR in Hungary and LatAm-style clearance of e-invoices in Italy. Poland has chosen to adopt a step by step approach, with more and more intrusive measures and it is predicted in the not-too-distant future that all invoices will need to be issued in electronic form, in a structured XML format, to enable efficient tax control and provide the state with greater visibility over VAT.
About the Author
Alicja Kwiatkowski is a Regulatory Counsel at Sovos TrustWeaver. Based in Stockholm, Alicja’s background is in law and IT with a professional focus on international e-invoicing compliance, personal data protection and cyber security. Alicja earned her degree in Law from University of Warsaw, Poland and LL.M in European IP Law from Stockholm University, Sweden.
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