The Ministry of Finance referred the draft Act amending the Goods and Services Tax Act and some other laws to the bodies concerned. This project repeals the reverse charge mechanism and the tax liability of the buyer applied under the existing rules.
Project dated to 14 May 2019 aims to introduce a mandatory split payment mechanism (MMP) as a more effective tool to combat VAT fraud than a reversed burden.
As has been shown by the analysis of the functioning of the reverse charge mechanism, it does not fulfil its role comprehensively – there is an improvement in the industry in which it is active, but criminal activities are transferred to other industries.
The MPP is expected to work overall, although – like the reversed load – it will not be mandatory for all.
The introduction of a reverse load in a given industry pushes frauds from this industry and takes them directly to another industry
Mandatory form of MPP
The split payment obligation will be covered by the supply of goods and services which have been subject to the reverse charge mechanism so far – their list will be found In Annex 11, 13 and 14 Act dated 11 March 2004 on tax on goods and services (Journal of Laws of 2018, item 2174, as amended These include steel products, Animal and vegetable oils and fats – rape oil only, construction and finishing works. In addition, transactions included in this range In the Annex for the draft Act, which covers parts and accessories for motor vehicles; coal and coal products; electrical machinery and equipment, their parts and accessories, and electrical equipment and parts and accessories thereof.
The MPP is also to be mandatory for invoices documenting transactions between taxable persons whose single value, regardless of the number of payments resulting therefrom, exceeds 15,000 PLN or the equivalent of that amount. Part of the transactions currently under reverse charge — those below 15,000 PLN – they will therefore not be subject to the split payment unless the entrepreneur decides to do so voluntarily.
From the VAT account we will pay not only the tax on goods and services, as is currently the case, but also among others ZUS
Termination of guarantee bail
With the reverse burden, the tax liability institution was introduced, which functioned through guarantee bail. As the practice has shown, it has completely failed to fulfil its role, and was even used by illegal operators, who used it to become credible and then disappear after the transaction.
The bill proposes that the new form of responsibility should cover cases where the net value acquired in a given month from one goods listed In Annex 15 exceeds the amount 12,000 PLN.
This is to eliminate cases of artificial sharing of transactions involving sensitive goods in order to circumvent the obligation to apply the split payment mechanism.
According to the proposed solutions, as mentioned above, the mandatory application of the split payment mechanism will be applied to transactions with a value of at least 15,000 PLN.
New invoice record and sanctions for lack of registration
The invoices are to appear with a special indication in the form of a ‘shared payment mechanism’ for documents for transactions covered by compulsory split payment. It is intended to signal the need to regulate payments in MPP and to carry out control functions for tax authorities.
In the absence of a record, it is proposed to impose sanctions on the entrepreneur in the amount of 100% the amount of tax shown on the invoice. Natural persons for this act will be held liable as for fiscal misdemeanour or for fiscal criminal offence.
VAT account open to other taxes
The basic disadvantage of MPP, i.e. the suppression of the company's financial liquidity, is to be offset by the introduction of the possibility to pay from the VAT account not only the tax on goods and services, as is currently the case, but also other claims, i.e. income taxes, excise duties, duties and ZUS contributions.
The project is to be assessed, among others, by the Head of KAS, President of NBP, National Trade Union Agreement, Director of National Tax Information, President of Public Procurement Office and Council of Social Dialogue.
Author:
Katarzyna Kołbuś - Editor leading RB Magazine. From Over 10 years related to industry press, including the Financial Gazette and portal ipip.com.pl, which is devoted to finance, taxation, law, politics and the economy. She graduated from Polish philology at the UMCS and the linguistic text editing at the University of Warsaw