Income tax settlement based on jpk kr file

Currently, due to changes in regulations introduced under the Law of 10 September 2015 on amending the Act - Tax Ordinance and some other laws[1] (Further to the Amending Act, which obliges taxpayers to transmit data electronically (on-demand JPK), tax authorities can almost continuously monitor many tax settlement areas.

This situation has created new conditions for these accounts. The taxpayers must be aware that the tax office can at any time ask them for, for example, the structure of the JPK KR, i.e. electronic accounting books, and thus see how the actual income of the company is shaped, i.e. the tax base.

This makes it necessary to ensure that these books are kept in a clear and unambiguous manner. A key factor in achieving this objective is the way accounting records are kept in the context of income tax accounting.

1. Introduction

It is worth starting the full process of adapting the books to the new legal conditions by reviewing the functioning of the account plan and making changes to it, as it is the carrier of all information in both financial and management accounts.

The way in which the basic tasks of the accounting officer were carried out was substantially changed by the amendment of the initial law In 2016 by introducing electronic data exchange between taxpayers and tax authorities (in accordance with the amending law).

Until then, the accounting officer could, by any means and by any means, fix advances for income tax in order to complete at the end of the year the CIT/PIT declaration in accordance with previous advances or a declaration verifying them by calculating the actual income tax for the year in question.

The correctness of these calculations was only checked at the time of the possible tax check.

Before 1 January 2007 monthly declarations have been sent (CIT-2), with information on the amount of the calculated income tax advance, and then the tax could verify the correctness of these calculations in the context of the advance payments received.

The scope of such checks was selective and covered a small area as the way they were carried out was manual and the number of people involved in individual cases was relatively small.

After 1 January 2007 monthly declarations were withdrawn and the payment of advance tax was liberalised, but continued to check the reliability of the calculations and the timely payment of advances was carried out by officials on a relatively small scale.

Without monthly declaring their income to the tax payers, the obligation to pay contributions to income tax was different. There were also those who manipulated the accounts so as to hold as long as possible the money due to the tax. Such actions were difficult to detect without careful control, for which there was no human and time.

This has changed as a result of the provisions contained in the amending law.

2. Account plan basic support for transparent settlements

2.1. Account plan and computer program

Act of 29 September 1994 on accounting 2 (further u.o.r.) accurately describes the templates for reporting to entities subject to that Act. As far as the account plan is concerned, under Article 83(1) u.o.r.

it is recorded that, in order to harmonise the rules for grouping economic operations and to reduce the workload associated with the establishment of company account plans, model accounts may be used.

In the next The paragraph of this Article indicates that, by means of a regulation, the Minister responsible for public finances may define model accounts plans. Indeed, for some entities, such model plans are valid and published in regulations, e.g. banks 3 .

However, there is freedom among entities belonging to other sectors to design their own account plans. Practices published in professional literature may be used, but are not mandatory.

However, in many cases economic operators are supported by these plans (so-called model account plans), as this is a convenient tool and makes it much easier to communicate, exchange information and interpret the accounts of certain economic operations.

Nevertheless, many companies in Poland in the EU are cooperating with foreign entities or subsidiaries of foreign entities. In such cases, you can meet other account plans than those commonly used in Poland. Before the accountant works on modifying the account plan, it is worth getting acquainted with the content of the JPK KR structure.

Knowledge of this structure will undoubtedly help to properly shape the data that will be transferred to tax control through JPK files.

It is therefore worth knowing that JPK KR sends the following information from the computer program:

1) the exact data of the taxable person,
2) the duration of the data contained therein,
3) the accounts on which records were recorded during the period concerned, giving details to the lowest level of analytics and all names of synthetic and analytical level accounts,
4) Substantive areas for accounts named account teams,
5) opening balance (wn/ma)
6) turnover of the period concerned (wn/ma),
7) increasing turnover (wn/ma),
8) balances (wn/ma),
9) record log, specifying the operator responsible for the record,
10) the accounting records for the period concerned, including detailed accounts, their descriptions and records containing amounts in specified currencies.

The account plan, as a component of financial and accounting programs, is a dictionary or file affecting many basic functionalities of the IT accounting system. Speaking of account plan functions, first the place should be referred to the sorting of data by assigning amounts from economic operations to the relevant accounting accounts.

Another account plan functionality is the possibility of automatic reporting. In most computer accounting programs these are the balance sheet and the profit and loss account. In order to be able to use this option, you should check that all accounts are correctly assigned to the items of the relevant reports.

The assessment of this regularity should consist in verifying whether the balance sheet accounts are adequately linked to the balance sheet items and the resulting accounts to the items in the result account.

According to accounting theory, accounting accounts are divided into:

1) active balance sheet,
2) a passive balance sheet,
3) asset-liability balance sheet,
4) the resultant revenue and
5) the resultant cost.

This breakdown is crucial for the correct placement of account balances into the relevant reporting items.

In addition, producers of financial and accounting programmes introduce additional characteristics for accounts, as some of them are specifically subject to turnover or balances. For example, the account where exchange differences are recorded. According to Article 42(3) u.o.r.

exchange rate differences are shown as surplus amounts positive over negative (financial income) or negative over positive (financial costs).

In order to properly draw up a result account in the accounting program, it is necessary to check whether the account in which the exchange rate differences are recorded is correctly configured, as calculations consistent with Article 42(3) u.o.r. requires additional settings definitions.

Similarly, the items where the amounts ‘including:’ should be presented as a piece of the sum shown in the summing line.

Returning to the account breakdown shown above, it is also necessary to assess whether each account has a correctly defined type. In particular, it is necessary to check whether passive or active accounts are not defined as only active or passive.

This is a frequent error of users of accounting programs, causing an incorrect balance sheet calculation. Unfortunately, it is identified only when the balance sheet is generated, and then it is difficult to improve.

Regardless of the programme used by the company in the accounting system, it is important to carefully review its documentation and prepare a plan of accounts not only in line with the business specifications but also in line with the recommendations of the software manufacturer.

2.2. Account plan as a tool for transparency of accounts

second The transparency of the account plan for the calculation of liabilities to offices, including income tax, is an important issue. Taking into account the provisions of the laws governing the determination of the tax base (CIT and PIT) the gross profit calculated in the result account is generally different from the tax base.

This difference is due to adjustments (e.g. NKUP or non-tax revenue) to be made to establish the correct tax base. To date, accountants have calculated the tax base through various ways and used various tools to do so. The result was a condition in which only the person calculating the income could explain the calculations it applied.

At present, it is appropriate to do so so in order to make the calculation of the tax base clear and easy to identify all activities carried out in relation to the definitive determination of the tax base.

Such an approach will be served by a well-designed account plan, which means that it should include accounts that allow for a transparent interpretation of the course of proceedings when establishing the tax base.

In order to obtain such an effect, first of all, all exceptions to revenues and costs that are taken into account when calculating income in a given entity (gross profit/loss adjustments). This is not only about permanent (permanent) exceptions, but also those shifted over time (e.g. unpaid ZUS contributions).

A detailed presentation of non-tax revenues and costs can be found in:

1) Articles 12(4) and 16(1) Act on 15 February 1992 on corporate income tax 4 (Next the Corporate Income Tax Act),
2) Articles 14(3) and 23(1) Act on 26 July 1991 on personal income tax 5 (Further u.p.d.o.f.).

In Table 1 some examples of such exceptions are presented, which, if they occur in the company, should be reflected in the account plan.

Not without reason in the table 1 are presented exclusions from revenue and costs together with the provisions that define these exclusions, as in e-reports which the majority of taxpayers are required to send from 1 October 2018, Articles of laws on the basis of which income or cost is excluded from the tax base are required.

If non-tax revenues and NKUP occur incidentally and are small amounts, they can be recorded in aggregate accounts, i.e. by adding an analytical account, e.g. 99, where such amounts can be entered (see diagram 16 ).

It is worth knowing that on the tax note amounts can be combined to 20,000 PLN and in e-reports, they can be given collectively as ‘other’ without the need to indicate the rules on which these exclusions arise.

However, when there are more costs and non-tax revenues, it is worth designing an account plan so that the costs can be divided into the costs of obtaining revenue (hereinafter: KUP) and NKUP, as well as revenue for revenue and non-tax revenues without losing information about their types. 2).

With this structure of the account plan, you can clearly report costs by tax and non-tax. A similar breakdown can be applied to income accounts. On the chart 2 dictionaries (records) were used in the account plan. It is worth to include a few words of explanation.

Many computer programs for accounting, both Polish and foreign, have the opportunity to join the dictionary accounts plan. A typical dictionary, which can be found in many accounts plans, is a dictionary of contractors, also called the contractor's file.

The effect of placing a dictionary (record) in the account plan is primarily the ergonomics of working with the account plan. In the diagram 2 An additional effect was obtained, namely consistency in generic accounts. The elements in each dictionary have the same numbering and thus adding a new type of cost, e.g.

in the dictionary (Foreign Services) attached to the analytical account of the KUP, will result in the same type appearing with the same number under the NKUP account. Thanks to this system, reporting and any verifications of records are easier and more effective.

It is worth considering carefully inserting the NKUP cost accounts into the plan, as due to the introductions of 1 January 2019 amendments to the rules on the settlement of passenger cars, under the Act of 23 October 2018 amending the Personal Income Tax Act, the Corporate Income Tax Act and certain other acts 7 , new titles for NKUP costs are emerging, which should be made transparent in order to be able to report them clearly.

In the context of the design of NKUP accounts and non-tax revenues, it is also worth to enter information in the names of these accounts about the bill, article and paragraph from which the fact that a given cost (income) is classified as non-taxable.

At the end of the year, at the time of the e-Report, this will facilitate the work of each accounting officer.

Act of 27 October 2017 amending the Personal Income Tax Act, the Corporate Income Tax Act and the Flat-rate Income Tax Act on certain revenues generated by individuals 8 introduced a separate category of income, which is capital gains, and distributed revenue from this source from other taxpayers' income (Article 7(1)(2) the Corporate Income Tax Act).

This means that for 2018 taxpayers are required to separate capital gains and to allocate costs to them. Qualified income as capital gains is included under Article 7b the Corporate Income Tax Act In the CIT declaration for 2018 have appeared over and over again first additional fields for these types of revenue and corresponding costs.

In the context of transparency of accounting records and reporting in the account plan, it is also worth adding separate accounts for these revenue and cost categories.

Another issue is the alignment of the account plan not only with the specific business characteristics, but also with mechanisms to verify the correctness of data in JPK files, e-reports and other data sent in electronic form to offices. It is worth thinking, for example, about the difference in the accounting of the amounts into the tax due when it concerns sales made by the entity and entries into the VAT account due, the reverse charge tax or other tax-related charges (see diagram 3).

Such a distinction of accounts may make it very easy to agree on the correctness of VAT settlements in the context of the accounts of economic operations in the JPK KR. In 2019 an obligation has been introduced to inform the head of the KAS about the tax schemes implemented to counter tax optimization.

This obligation rests, inter alia, on tax advisers, legal advisers and other experts and is intended to cover the schemes implemented from 25 June 2018 Furthermore, in the information provided to the KAS, they should indicate the taxable person for whom the scheme was prepared.

The taxpayer may not consent to the transmission of his data, then the taxpayer's data will be disregarded in such information.

However, this does not change the fact that tax schemes will be subject to fiscal observation, so it is worth carefully documenting the economic operations in such schemes by skillful and clear preparation of the account plan so that all processes involved can be easily traced.

Another change that was introduced after 2016, it is mandatory to transmit financial statements electronically, in the form of structured XML files. It is worth mentioning yet one an important matter. It is about linking the account plan to the type of accounts in force for the taxpayer.

The Accounting Act differentiates the requirements for financial statements in terms of the size of the activities carried out by the taxpayer (e.g. Annex 1, 4, 5, 6 do u.o.r.). Therefore, the account plan should be adapted to correspond to the reporting arrangement that the individual should prepare.

This is not mandatory, but will certainly affect the transparency of financial reporting.

3. Excel reports with income tax advance calculations

3.1. General

The fact that XML files can be opened relatively easily in Excel sheets can be used to supply reports designed in the spreadsheet. As indicated earlier, JPK structures are XML files, so the power of the reports is quite simple. The draft report will be presented here to determine the advance on income tax based on data from JPK KR file.

It is worth noting at first that the power supply of reports (especially those that serve to settle accounts with offices) data from JPK structures is of great value. The advantage of providing reports with data from JPK files is that such reports allow for systematic monitoring of the content of these files.

For the accountant, it is important that he can control the data in JPK files on an ongoing basis, their consistency and compliance with the accounts with the offices.

Given that an accounting officer can be asked for JPK files on demand at any time, it is worth systematically verifying the correctness of their content, and in addition, it is always necessary to be sure that the accounts that were sent to the tax authorities are consistent with the content of JPK files.

3.2. Basic description of the report

The report presented here designed in the MS Excel workbook, based on the data source from the JPK KR file, calculates the amount of the income tax advance and the tax for a given year. Below is a short description of the report in the form of a metric.

Table 2. Report metric – calculation of advance on income tax

The report presented in this chapter consists of 12 sheets on which data from the structure of JPK KR are loaded for each month. These sheets were named I, II, III, IV... etc., where I – January, II – February, III – March, etc.

Figure 1. Excel workbook to calculate the advance on income tax

In addition, a sheet counting the named CIT and the initial sheet – START (see picture 1).

The attached report is practically ready to use. A reader wishing to use it should only perform three steps:

1) generate JPK KR file from the accounting program,
2) supply data report from JPK KR file,
3) in the relevant fields on the CIT sheet, in column A, enter accounting accounts on which revenues and costs are recorded.

Data report supply

After generating the JPK KR file from the financial-account system for a specific month, select this month's tab and press the right mouse button anywhere in the sheet. From the popup menu that will be displayed, select the XML Import command (see picture 2).

Figure 2. Data report supply

In the window to be opened, indicate the JPK KR file generated from the accounting program. Then, with the “Import” button, enter the data contained in the sheet (see picture) 3).

Figure 3. Reference to JPK KR file report for import

After importing data from JPK KR file, you need to refresh the sheet using the Data Refresh menu (see picture 4).

Do not use the “Refresh All” command, because the data from the other sheets comes from different JPK KR files and after copying the report into a new disk location (e.g. when setting up a workbook for a new year) error messages may appear.

Figure 4. Sheet refresh

In this way, data should be loaded in subsequent months. An additional important issue to consider when importing data is the fact that December should be fed to the JPK KR file with the data from December, before the year is closed, or more specifically, before the balances are accounted for.

The report collects the data from the fields “Saldo Wn” and “Saldo Ma” of the JPK KR file and after the balances have been cleared from the resulting accounts at the end of the year, the balances on these accounts will be zero.

Introduction of result accounts

On the CIT sheet, in column A, enter the relevant areas of the result account. For synthetic accounts and those from which data is taken from a higher level, you must enter an asterisk at the end of the account symbol (see drawing 5):

in the area of income accounts, accounts shall be entered in which business revenue, other operating revenue and financial revenue are recorded;
in the area of costs, account must be entered for generic, other operating and financial costs. For entities that keep a cost account by team 4 and 5, you need to enter only team accounts 4, a for team cost account 5, We are, of course, introducing accounts of this team;
in the area of non-tax revenue accounts, accounts are entered in which revenues are accounted for which they are disregarded in the CIT settlement;
in the area of NKUP costs, enter the accounts in which the amounts of such operations for which they are excluded from tax costs are entered. It is worth knowing that in the report the formula entered in the field “Description” takes the account name from the JPK KR file. If in the accounting system of the NKUP account are described with appropriate references to the regulations, then in the report the user will see the amounts and legal appeals on the basis of which NKUP costs are recorded. As a result, the e-report will provide directly the data which only needs to be written into the e-reporting tax note;
the pre-last area is other revenue, i.e. revenue that comes from outside the financial year and will be collected in the income tax settlement for that year. It is worth using off-balance-sheet accounts with the right description;
the last area is other costs and, as in the previous point, these are deductions from previous years (e.g. losses) which are taken into account in the annual tax settlement. Information about such costs should also be entered through off-balance-sheet accounts with an appropriate description (e.g. 916 – loss 2016).

Figure 5. CIT sheet — Calculation of the advance on income tax

After performing these activities (data supply and entry of accounting accounts in appropriate areas), the report is ready for use. After each data input, check the line ‘RW income (gross profit)’ (row 27). At this point, in the field of a given month, there must always be an amount equal to the gross profit generated in the profit and loss account in the accounting program from which the JPK KR file originates.

Working with the report In the next year

After the end of the financial year, the report may continue to be used in subsequent years. Thanks to properly designed formulas, it is enough to load new data in January and all data from the following months from previous years will be automatically deleted.

At this point you should mention two matters:

if the report is to be used In the next the year should be saved using the “Save As” function and thus changed its name, e.g. adding a new year in the name;
the report automatically cleans data after importing data from January only for reports where the financial year coincides with the calendar year. If it is different, it requires some modifications, which are sure to be handled by a person who knows how to operate Excel at an intermediate level.
3. Advanced report description

To initiate a report in Excel to be powered by data from JPK structures, First, prepare the sheet in the Excel workbook for which data from the JPK file will be downloaded in the report. There are several ways of doing this task – they are described in the book “JPK KR with Excel” 9 . At this point will be presented one of them, which will allow to prepare a sheet to download data from the JPK file.

Sheets with JPK KR data sources

However, before a report based on data from the JPK starts to be designed and before a data download sheet is prepared, you should know about one a very important issue – namely JPK files contain mandatory fields and optional fields. This is important from the point of view of treating the data in these files as a source for reports.

If we open an XML file in Excel, then the map (the XML source) is automatically created on the basis of the data contained in the file. Required fields, even if not filled with data, will be included in the map because they will be automatically filled with default data, e.g. the word "BRAK". This is different for optional fields.

If they are filled, this field is included in the XML map, but if the optional field in the XML file is not filled, then in the Excel map created this field will be omitted.

Consequently, at the time of loading further data on the previously created map, even when all optional fields are already completed later, they will not be entered into the sheet when the previously created map is used.

In order to prevent this situation, it is worth reading the JPK file structure documentation, especially the JPK KR file structure, which is placed on the Ministry of Finance website 10 . In the brochure are given in exhaustive how all important information related to JPK KR.

You can find in it descriptions of fields that contain a diagram of this structure. It is worth noting the graphic diagrams presented there, where mandatory fields are surrounded by a continuous line, and optional – interrupted.

Knowledge of the construction of an XML map for the JPK structure is important, because it is advisable that opening data from JPK files in Excel sheets be done on the basis of files where all fields are filled – both mandatory and optional.

When designing a report to calculate the income tax advance and ultimately also the tax for a given year, it is necessary to initiate the JPK KR file download sheets first.

To do this, you need to open a new Excel workbook and then put it in it 12 sheets, after one for each month, as shown in the figure 5 – and then name them: I, II, III... XII.

In the next step, on sheet I, mark cell A[1], go to the “Data” tab, select “Download external data” and indicate “From other sources” in the menu, and then “From XML import” (see picture 6). In some versions of Excel, XML data import can be called from the command: “From a file”, on the “Data” tab.

Figure 6. Downloading data to Excel Sheet from XML file

After performing these operations, a window will be opened in which the JPK KR file, previously generated from the financial-accounting program, will be indicated to import to the Excel sheet. The activities described for sheet I (January) must be repeated on the other sheets – to sheet XII (December).

When initiating areas to load data, it does not matter what periods the data comes from. At this stage of report design on all sheets I–XII may be data from the same month, but necessarily from a year earlier than the year for which the report is designed.

Sheet counting advance tax

The counting sheet is named ‘CIT’ (picture 5), But you can call it whatever you want. This sheet contains the following areas:

1) revenue,
2) costs,
3) non-tax revenue,
4) non-tax costs,
5) amounts outside the accounting period,
6) deductions outside the accounting period.

Report columns that were designed in the picture presented 5, is:

1) account,
2) description,
3) months from I to XII.

Just first the “Account” column is editable, so you can manually enter an account. Other columns have formulae in place and should be protected against accidental change.

In order to generate correct data by the report, the accounting officer is, in effect, forced to design an account plan so that formulas can collect the correct amounts for calculation. With this approach, all the information needed to calculate the tax is transparent, and most importantly, it is all in one place.e.

in a computer financial and accounting program.

_____________________________________________________

1 Act of 10 September 2015 on amending the Act - Tax Ordinance and some other laws, Journal of Laws of 2015, item 1649.

2 i.e. Journal of Laws of 2019, item 351.

3 Notice of the Minister of Finance from 23 April 2019 on the publication of the uniform text of the Regulation of the Minister of Finance on the establishment of a model bank account plan, Journal of Laws of 2019, item 946.

4 i.e. Journal of Laws of 2019, item 865.

5 i.e. Journal of Laws of 2019, item 1387 as amended

6 The diagrams presented in the accounts plans are from Sage Symphonia FK.

7 Journal of Laws of 2018, item 2159.

8 Journal of Laws of 2017, item 2175 as amended

9 M. Chomusko, JPK KR with Excel, Kraków 2018, p. 23.

10 https://www.mf.gov.pl/documents/764034/6432412/20181026_STRUKTURY_JPK_VAT_KR.pdf (access: 21 May 2019).