Extensive revision of tax legislation becomes a fact with effect from 1 January 2019. After a very rapid legislative process last Tuesday, the Sejm passed comprehensive changes to tax laws, and on Friday the Senate adopted the bill without amendments. The rapid procedure and vision of tax advice the Government is trying to impose raise legitimate concerns about the drastic deterioration of tax law.
On 23 October 2018 The Third Reading Sejm passed a bill on amending the Income Tax Act and the Tax Ordinance, which introduces far-reaching comprehensive changes to the Polish tax system, which we mentioned earlier. There is no doubt that the Amending Act contains both positive and negative changes from the point of view of the taxpayer.
However, the problem is not in the very essence of the changes that can be discussed about their legitimacy, but in the quality of the normative act, which has already been practically authorised by the legislator.
Instant law-making
Comprehensive bill (document consists of 204 the parties, without justification and without implementing rules) contain a number of comprehensive changes which have been previously developed by specialised substantive teams in particular areas.
This method of action was most justified, since the diversity and complexity of issues require extensive expertise and practical experience. The work continued at its pace, but in September 2018 The whole project was addressed urgently to seismic work.
In the light of such a decision, draft laws in the form in which they were drawn up for September 2018 have been the subject of parliamentary work, there was no time to elaborate many important provisions, only minor amendments proposed by the Committee on Public Finances were made in the legislative process.
Tax advisers are needed, but their role as persons who pursue the profession of public trust must be defined for the benefit of the Polish state
On first Place — Budget receipts
On 26 October 2018 The Senate was examining the motion to adopt a bill of amendment. The substantive discussion on the project was basically not there. Single Senators' comments indicate that the quality of the law was set on second place. The most important are money for the State, which is to appear, among others, in connection with activities sealing the tax system.
The only proposal was made by Senator Kazimierz Klein, and was to exclude from this amendment changes in the general clause, changes in individual interpretations, reporting tax schemes and changes in the exit tax. As the Senator argued, the legislative process was disproportionately fast in relation to the importance of the changes:
„Notice that no one asked a question about this bill. It happens so often in the Senate, but also in the Sejm, that the harder the bill, the more complicated, the more important, the less discussion, the less questions. Here again, Mr. Marshal and Mr. Marshal's service, so as not to put us in such a situation that difficult, complicated laws make us consider ourselves without being able to read the bill, not even overnight, just hour by hour.”
In response to these comments, rapporteur Mr Bierecki briefly indicated why the proposals had to be adopted:
"I, in my report, did not give any information relevant to your senators, either, which we heard in a meeting from the Minister. The question of what revenue we expect to be in the budget for the introduction of this law was the amount 1,400,000,000, Yeah? I remember well – 1,400,000,000. I took the liberty at that committee meeting to say that if there is 1,400,000,000, I'm in a hurry, right? I'll be in a hurry. We need... that money. The calendar of the Sejm, the Senate, everyone knows. We know that we need to adopt this at this meeting so that this bill can apply from 1 January. And it's a good thing it's going to apply."
New dimension of tax advice
As a result of the Friday meeting, the amending act was adopted without amendment. The course of this legislative process shows how the laws introducing key changes in the tax system are treated. All points to the fact that we have to implement changes from 1 January 2019 Some implementing regulations still need to be passed.
In such a situation, we must indicate to our customers the right course of action, with the quality of the law being made leaving much to be desired, while expectations from entrepreneurs (and rightly) are of the highest level.
Senator Bierecki made his suggestion on how to provide advisory services in this situation:
„It is certainly not a professional group to organize a national sport of tax avoidance, because it ends badly for every country. This is supposed to be a solid advice for taxpayers how to comply with the applicable law without harming the budget, for the benefit of entrepreneurs. They are needed, but their role as persons who pursue the profession of public trust must be defined for the benefit of the Polish state.”
Nature of amendments
The amendments to this amendment concern, inter alia:
- • clarification of the rules on the application of the general anti-circumvention clause;
- • extending the scope of sanctions applicable to taxpayers – the principle of the assessment of additional tax obligations;
- • the obligation to report tax schemes;
- • a completely new transfer pricing system;
- • taxation of income from unrealised profits – so-called exit tax;
- • taxation of virtual currencies;
- • taxation of transactions in debt packages;
- • changes in the taxation of profits of foreign controlled companies;
- • clearing the costs of qualified intellectual property rights;
- • changes in the rules on withholding tax collection.
The bill awaits the President's signature.
Author
Leszek Dutkiewicz
Partner at Russell Bedford. From 2011 related to Russell Bedford Poland. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services. He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices.
Author of a publication on tax, civil and international law issues. Lecturer in tax law training. He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.