The tax authorities are of the opinion that it is a taxable person who is best oriented in his business to set the vat rate. It is therefore essential that the taxable person determine the correct classification for the goods sold. The application of the wrong rate may result in tax arrears and the need to pay interest on late payment.
In some cases, the fixing of the appropriate VAT rate gives the taxpayers a dizziness. The reason is the impreciseness of the rules and unclear rules for their application. This makes life difficult for entrepreneurs, especially in the food industry. It is in it that there are the most absurdities associated with the application of appropriate tax rates. For example, there are differences in the rates for certain goods:
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- Potato chips taxed at the rate 8% and corn chips taxed at 23%,
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- mineral water taxed at the rate 8% and taxed source water 23%,
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- peaches taxed at the rate 5% and bananas taxed at the rate 8%,
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- cereal coffee taxed at the rate 8% and cocoa taxed 23%,
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- or finally taxed mustard 23% and mustard sauce taxed at the rate 8%.
Looking at the above comparisons, one cannot resist the impression that practically identical goods are taxed at other tax rates.
The importance of the problem is demonstrated by the fact that disputes with tax authorities about the application of the relevant rate often end before administrative courts and even the Court of Justice of the European Union.
An example is last year's dispute between the Polish AZ Company and the Finance Minister about the tax rate for pastry products, whose minimum shelf life exceeds 45 days finally decided by the CEU in the judgment dated 9 November 2017 No. C 499/16.
Although the taxpayer lost to the tax dispute, the Court of Justice reiterated the view that the principle of neutrality precludes similar goods or services which are competitive to each other from being treated differently from the VAT point of view.
Tax rates in Poland
Tax rates and their amount are set at under Article 41 Goods and Services Tax Act. For the moment, we have the following tax rates:
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- basic rate of 22%,
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- Rate of 7% for goods and services listed In Annex 3 to the Act,
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- Rate of 5% for goods listed In Annex 10 to the Act,
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- Rate of 3% for goods and services listed In Annex 6 to the Act,
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- and a rate of 0% for goods and services listed In Annex 8 to the bill.
In addition, tax payers may apply a flat rate of 3%, the flat-rate refund to a flat-rate farmer shall be 6.5%, and the rate for intra-Community supply of goods and exports of goods shall be 0%.
At this point it is necessary to clarify that according to Article 146a laws in the period from 1 January 2011 to 31 December 2018 the basic rate is 23%, reduced rate 8%, flat-rate refund to flat-rate farmers 7%, and the flat rate for passenger taxis is 4%. At present, the Ministry of Finance does not plan to return to lower tax rates before 1 January 2011 It is therefore very likely that the application of this provision will be extended for another year.
New Tax Ordinance has in principle a departure from the use of PKWiU 2008 for the Combined Nomenclature (CN) in the field of goods and the current Polish Classification of Products and Services of PKWiU (2015) services
Check the classification of goods or services
A taxpayer who wants to set the appropriate tax rate First, should examine whether the goods or services sold are located in one of the above annexes to the Act. If the legislature did not foresee for the goods one from reduced rates, then the basic rate of 23%.
The goods and services listed in the annexes to the Act are eligible according to the codes of the CPWIU 2008. Where the goods or services are located in one of the annexes, the taxpayer should refer out to the PKWiU in order to check which goods and services are specifically included under the symbol.
An explanation to PKWiU from 2015, if the grouping data overlaps with the PKWiU 2008, which, unfortunately, is lacking. They indicate what falls within the scope of the grouping and what is excluded from it.
In the event of difficulties in establishing the PKWIU code or doubts as to whether a given product or service belongs to a given symbol, taxpayers may use the search engine for classification on the website of the Central Statistical Office or request an interpretation to the Classification Centre and Nomenclature of the Statistical Office in Łódź.
New Tax Ordinance has in principle a departure from the use of PKWiU 2008 for the Combined Nomenclature (CN) in the field of goods and the current Polish Classification of Products and Services of PKWiU (2015) services. It is also intended to introduce a WIS system, i.e. binding rate information, as an instrument providing certainty to taxpayers about the regularity of VAT on transactions carried out.
It is worth mentioning that the Ministry of Finance has announced that it is beginning to work on a new VAT rate matrix to harmonise it. In communication published on the MF website on 13 June 2018 reads:
„We are working to sort out the current situation, which causes interpretational problems and generates absurd situations of assigning individual goods to appropriate rates. The new matrix in no way has a fiscal objective. The changes will give taxpayers greater certainty about the application of tax rules. This will undoubtedly reduce the number of disputes over the application of appropriate VAT rates."
Resort plans to change the way goods and services are identified by moving away from the use of PKWiU 2008 for the Combined Nomenclature (CN) applicable in customs law. This approach is fully consistent with Article 98(3) Directive 2006/112 in which Member States may use a combined nomenclature when applying reduced rates to different categories of goods, helping to define precisely the scope of the category.