VAT rates under the new matrix

The Ministry of Finance has decided to make substantial changes to the identification of goods and services which have a direct impact on the application of VAT rates. Not only in the opinion of taxpayers, but also in the ministry, the system of determining these rates is complex and expanded, and entrepreneurs are not sure that they properly classify the goods and services in question. The new rules would apply from January 2020, But some of them are about to come into force. 1 April 2019.

Introduction In the Government Legislative Center, a draft amendment of the Tax Act on Goods and Services and Tax Ordinance[1] (further draft VAT rates or draft

from 8 November 2018). It provides for the opt-out of further use in order to tax VAT, the Polish Classification of Products and Services – PKWiU 20082, which can be used to 31 December 2018[3]. In place of PKWiU 2008, which in the opinion of the Ministry of Finance is inefficient, complicated

and does not protect taxpayers due, inter alia, to the lack of binding power of classification opinions issued by the Central Statistical Office[4], The EU Combined Nomenclature (hereinafter CN) in the field of goods and the current Poland Classification of Products and Services of PKWiU will apply 20155, When it comes to services.

In the customs classification of CN, goods which are traded are included, the goods in question being classified in a specific grouping (division, heading, subheading, code)[6], and the European Commission shall adopt each year a regulation presenting the full version of the CN, together with the rates of duty applicable from 1 January next year.

According to the ministry estimates, at the end 2017 was 1,653,110 VAT taxable persons active in making declarations relating to this tax. According to the law of 11 March 2004 on tax on goods and services[7] (Next the VAT Act) currently applicable three VAT – basic rate 23% and two decreased (5 and 8%). They will not change. In 2019

New rate matrix for goods and services

In the project with 8 November 2018 It is proposed to simplify the system of VAT rates by adopting, where possible, the same rate of tax for the entire CN departments, as indicated in the justification for the amendments, and to apply generally the principle of reduced rates if a change in the rate for the goods in question is necessary. The legislator points out that this will address the problems of different rates for goods of the same category.

For example, to all products included in section 19 CN (products of cereals, flour, starch or milk; sugar confectionery) to be used one rate 5% The rate currently applies to fresh bread, depending on the date of shelf-life 5

be 8%, and pastry products (also depending on this date – 8 or 23%). The irrational criteria for setting the rates of the products concerned will therefore disappear.

During the period from 1 April 2019 to

31 December 2019, a 5% tax rate will apply to books, brochures, leaflets and similar materials, even when printed as single sheets, children’s books, picture books, maps of all kinds and electronic publications, including e-books[8].

In the same period the VAT rate 8% shall be valid for newspapers, journals and periodicals, whether or not illustrated or containing advertising material, excluding materials which are wholly or predominantly used for advertising purposes and for electronic publications (e-press)[9]. The rate will be reduced in this case

from 23% to 8% for releases that do not have the symbol ISSN.

According to the new matrix, it will be reduced from 8% to 5% VAT rate for, inter alia, products for infants and children, tropical and citrus fruits, coconuts, pistachio and almonds.

In order not to be so pink, the Ministry of Finance informs in the justification of the changes that the harmonisation of VAT rates in commodity groups will in some cases mean an increase in VAT rates.

VAT will therefore increase from VAT 5% to 8% for specialist journals and for fruit and vegetable juices other than so-called juices one-hundred-percent, from 5% to 23% This increase is motivated by the same rate (basic) for most beverages – tea, bottled water or coffee.

Consumers who like seafood will not be happy to increase the VAT rate – with 5% to 23% – For octopus, lobster, crab, langus, shrimp, oysters and clams, among others.

Binding rate information

The taxable persons will be able to apply for a decision issued by the director of the Chamber of Revenue Administration (hereinafter referred to as binding fee information (hereinafter referred to as WIS) for the purposes of taxation of the supply of goods, imports of goods, intra-Community acquisitions of goods or services, including, inter alia, the classification of that goods by division, item, subheading or CN code, or services by division, group, class, category, subcategory or item of PKWiU, necessary to determine the rate applicable to the goods or services, and the rate of tax applicable to that goods or services[10]. Fee for an application for a WIS which will only apply one goods or services, 40 PLN.

Summary

System changes proposed in the bill of 8 November 2018 They're groundbreaking. The absurd criteria for fixing the VAT rates of certain products (the already known shelf-life) should be removed from the tax rules as soon as possible. The rules of application for reduced rates will undoubtedly be simpler.

Binding rate information is intended to be a protective umbrella for taxpayers who want to be certain about VAT on goods or services they sell. Importantly, the decision can be relied upon and protected not only by the applicant but also by another taxable person, if the goods or services specified in the CIS are the subject of his transaction.

____________________________