The Ministry of Finance plans to introduce a new VAT rate matrix. one of its elements is to be Binding Rate Information in brief WIS. The amendments in this respect are provided for in the bill of 8 November 2018 amending the Tax Act on Goods and Services and the Act – Tax Ordinance.
Tax payers often wonder what VAT rate will be appropriate for the goods or services they sell. On first The problem may seem trivial, but the application of the wrong VAT rate may have a number of negative consequences, in particular if the taxpayer chooses instead of the basic rate one from reduced rates.
There is a tax arrears on which interest on late payment must be paid, and in some cases the taxpayer may face sanctions in the form of an additional tax liability. Choosing the appropriate VAT rate may be difficult, especially for similar goods.
Nor does the solution of the problem make it easier for VAT purposes, in the classification of goods and services, of the already outdated PKWiU 2008, to which there are no additional explanations. Therefore, taxpayers often ask for the right rate for a given commodity or service in individual interpretations.
Unfortunately, tax authorities often refuse to speak on this matter, claiming that they do not have such competence, and that it is the taxpayer who should classify the activity he is carrying out because he is best-informed on what goods and services he sells.
Tax payers still have to ask for a classification symbol to be given to the Centre for Classification and Nomenclature of the Statistical Office in Łódź. Unfortunately, this information does not constitute an administrative decision and is not binding on the taxpayer or the tax authorities.
In accordance with the proposed provisions, the WIS will be issued by the Director of the Tax Administration Chamber designated for this task (under the implementing regulation) for the purposes of VAT taxation.
Binding Rate Information is intended to respond to emerging doubts in this respect, providing taxpayers and tax authorities with more certainty as to the accuracy of the VAT rates applied.
‘In accordance with the proposed provisions, the WIS will be a decision issued by the Director of the Chamber of Tax Administration appointed for the purposes of VAT on supplies, imports, intra-Community acquisitions of goods or services,’ informs the Ministry of Finance.
The draft assumes that the decision to enter the WIS will be issued at the request of the taxpayer by the Director of the Chamber of Tax Administration. The application may be submitted by a taxable person holding a NIP number or by a procuring entity within the meaning of the Public Procurement Law.
The application will require detailed description of the goods or services.
The application may be accompanied by supporting documents, in particular photographs, plans, diagrams, catalogues, certificates, instructions, information from the manufacturer or other documents available, enabling the issuing body of the CIS to carry out the appropriate classification of the goods or services.
The application will be issued for a single product or service. Binding rate information shall be binding on the tax authorities to the taxable person for whom it was issued in respect of the service or goods to which the supply, import or intra-Community acquisition takes place after the date on which it is served to the taxable person.
After animating sensitive data, the issued WIS will be published in the Public Information Bulletin and will also have a protective value for taxpayers other than the applicant who will comply with them. The application itself will be subject to a fee of 40 PLN.
However, if the issue of the WIS requires additional examinations or analyses, the authority will call on the taxpayer to pay an additional fee to cover these expenses.
The decision shall include:
1) a description of the goods or services subject to the VIS;
2) the classification of that goods by heading, heading, subheading or CN code or by heading, group, class, category, subcategory or item of the CPD necessary for:
- (a) to determine the rate applicable to or for the goods concerned,
- (b) the application of the provisions of the Goods and Services Tax Act and the implementing rules adopted on the basis thereof, in the case referred to in Article 41b(3);
- 3) the tax rate applicable to the goods or to the service.
The Director of IAS for the WIS release will have 3 months.
According to the draft changes to the new VAT rate matrix are to enter into force from 1 January 2020, However, applications for a WIS can already be made from 1 April 2019, to allow taxpayers to get to know the new system and the revised taxation of goods and services.
Author:
Marcin Kołkowicz
Tax advisor, tax consultant at Russell Bedford Poland Sp. z o.o., graduate of the Administration, Management and Marketing of the Catholic University of Lublin named after John Paul II. The subject of tax law deals with from 2012. He gained experience in Lublin and in Warsaw tax advisory offices. Author and co-author of many tax publications, in particular for Tax and Tax Portal TaxFin.pl. In his career, he dealt with both direct and indirect taxation issues, with particular emphasis on VAT.