New VAT rate matrix and binding rate information – facilitation and challenges for taxpayers

On 13 September 2019 published Act of 9 August 2019 amending the Goods and Services Tax Act and certain other laws 1 (hereinafter referred to as the amending Act), introducing a new VAT rate matrix, i.e.

a set of regulations specifying goods and services benefiting from reduced VAT rates, as well as the way (procedure) taxpayers confirm the correct VAT rate.

This amendment entered into force 1 November 2019, However, the new matrix is to be applied as a rule from 1 April 2020 – in establishing the legislature, this solution is intended to enable taxpayers to adapt to the new matrix (from 1 November 2019 only the possibility of submitting applications for Binding Rate Information – hereinafter the WIS) was introduced.

There are many indications that the amending act introduces fundamental changes which have not been comparable in recent years in the area of determining the correct VAT rate.

This amendment is not limited to selective transfers of selected goods and services on the VAT rate plan and one of the key changes is the introduction of a WIS institution – a document to formally confirm the accuracy of the VAT rates applied by taxpayers.

1. Introduction

1.1. So far VAT system - need for reform

The finding that the current VAT rate regulation has created many difficulties for taxpayers in their practice seems to be a truism which does not reflect the actual level of complications in this respect.

Establishing the correct VAT rate often requires a complex analysis of the causistic rules, collecting detailed documentation of the goods or services concerned, and involving tax authorities and statistical authorities.

However, even taking all reasonable steps available to establish a correct VAT rate does not eliminate the risk of contesting the VAT rate applicable, which in extreme cases could result in tax arrears preventing the taxpayer from continuing to operate.

It seems that such a state of affairs is a derivative of many factors, the source of which is not only in the legislative technique used to construct the provisions of the Act of 11 March 2004 on tax on goods and services 2 (Next: the VAT Act).

Looking at the system of VAT rates in Poland First, indicate that the scope of the rates preferences includes a very wide catalogue of goods and services from almost all areas of economic life.

For example, reduced VAT rates can be applied to accommodation services, firewood, walnuts, sports facilities services, printed notes and agricultural machinery string. It is reasonable to assume that such a broad spectrum of goods and services as can benefit from reduced VAT rates already generates many doubts in this matter.

Assuming reduced VAT rates are to cover a very wide range of transactions, the Polish legislature has set itself a difficult task of defining specific benefits to benefit from preferences.

However, it seems that so far the Polish legislator has not dealt with this challenge with due care, as reflected in the legislative technique standardising the matter of VAT rates, which has contributed to the procedural chaos in this area.

In practice, the procedure for confirming the correctness of the VAT rate applied, under the provisions before the amending Act, was dependent on the type of benefit of the taxpayer. If the taxpayer decided to confirm the VAT rate for recreational admission services (e.g. entry to the gym, see e.g.

general interpretation of the Minister of Finance from 2 December 2014 3 ), sufficient was the request for an individual interpretation – in this matter the provisions the VAT Act did not refer to statistical regulations (see item 186 Annex 3 to the VAT Act Act – in the version prior to the amending Act), and consequently, the tax authorities consider themselves appropriate in determining the VAT rate.

However, in the past practice, a taxpayer considering the possibility of applying a reduced rate to services related to the activity of sports facilities should use a different mode of confirmation of the rate.

In this respect, provisions the VAT Act they referred to statistical regulations (see item 179 Annex 3 to the VAT Act Act – in the version preceding the amending law, which, according to the tax authorities, made it necessary to request the statistical authorities to classify the service correctly)[4].

What is particularly important, statistical authorities decide on classification in the form of classification opinions. It is not clear what value the classification opinions have under VAT rules – the mode and form in which these opinions are drawn up has not been clarified.

As far as goods are concerned, reading the scope of the individual PKWiU groupings should facilitate the link between this classification and the Combined Nomenclature (CN) 5 , However, in practice, the choice of the connecting keys between PKWiU and CN could already have created difficulties (are the keys published in the regulation or the keys made public on the website of the Central Statistical Office?).

Additional complications have also arisen with adjustments to the application of the CN – introduced by the EU Commission through classification regulations. Cases of cancellation of classification opinions by Polish statistical authorities after publication of such regulations are known[6].

However, it seems that in a slightly better situation there was a taxable person intending to confirm the accuracy of the rate applicable to imports of goods.

The VAT rate rules in this respect, as already in the version prior to the amending Act, referred directly to CN codes which, other than PKWiU, can also be confirmed by obtaining JTIs.

Therefore, a brief review of the legislative arrangements and practices for confirming VAT rates clearly made it clear that the VAT system, in particular in terms of the procedure for confirming rates, required significant redevelopment.

1. 2. Key assumptions of the amending act with 9 August 2019 for the VAT rate system

Complications in determining the correct VAT rate were also noted at the Ministry of Finance. As pointed out in the very justification for the amending act: "The multi-year practice of applying PKWiU has shown that the system of VAT rates based on it in Poland is indeed developed and complex, causing significant difficulties in conducting business activity – problems with the taxpayer having to properly allocate goods or services to the appropriate grouping of PKWiU, which is related to the application of appropriate tax rates".

The recipe for these systemic deficiencies is to:

1. in the area of substantive law – a departure from the long-established PKWiU 2008, to be replaced by two different classification systems:

(a) Combined Nomenclature (CN) for goods, and

(b) PKWiU 2015 services;

1. in procedural terms, the introduction of a new WIS institution, i.e. a decision, which, unlike classification opinions, is to formally confirm the correctness of the VAT classification and rate applied.
2. 3. Combined Nomenclature – basic information

The Combined Nomenclature (CN) is a tool for classifying goods – created within the EU for the Common Customs Tariff and trade statistics conducted by EU Member States (internal and outside the EU).

What is particularly important, the CN is based on the International Convention on a Harmonised Commodity Description and Coding System (‘harmonised System’, ‘HS’). The Harmonised System and its CN shall consist of:

• 1) sections (2 first digits),
• 2) position (digits) 3-4),
• 3) subheadings (digits) 5-6),
• 4) CN code (digits) 7-8)[7].
• first six CN numbers are code numbers relating to the heading and subheading of the Harmonised System. seventh and eighth the figure specifies the CN code. The harmonised content of the CN is published annually in the Official Journal of the EU.

The classification of goods under the CN may be affected in particular by:

• 1) General rules for HS/CN interpretation,
• 2) HS Explanatory Notes,
• 3) CN explanatory notes,
• 4) Classification opinions of the HS Committee (UN),
• 5) Commission classification Regulations,
• 6) JTI issued by the customs authorities of the EU Member States,
• 7) other HS/CN documents and decisions (e.g. EU Commission Communications, TEU judgments).

This is reflected in the text of the amending act, in particular in the conditions for amending or repealing the VIS.

1.4. PKWiU 2015 – Basic information

As part of the new VAT matrix, PKWiU is to apply only to services – replacing PKWiU 2008. As a general rule of PKWiU 2015 is an updated version of PKWiU 2008 and is based on similar methodological principles, indicating the basic objectives, design and use of classification and its interpretation:

• 1) level grouping first – „sections’ are marked with uniform symbols,
• 2) level grouping second – „Chapters’ are marked with two digits,
• 3) level grouping third – „groups’ are marked with three-digit symbols,
• 4) level grouping fourth – „Classes’ are marked with four-digit symbols,
• 5) level grouping fifth – „categories’ are marked with five-digit symbols,
• 6) level grouping sixth – „subcategories’ are marked with six-digit symbols,
• 7) level grouping seventh – „items’ are marked with seven-digit symbols.

In the methodological principles of PKWiU 2015 it was pointed out that in order to facilitate the reorganisation work, or to supplement the records of the source economic units, and to facilitate the inclusion of certain products in the relevant PKWiU groupings, the keys of the links of PKWiU were developed.

2008 – PKWiU 2015 and PKWiU 2015 – PKWiU 2008. These keys constitute a separate publication available on the CSO website.

In view of the above, and in view of the link between PKWiU 2015 with international statistical nomenclatures, when determining the classification of a given service, it is worth noting the information published on the websites of the Central Statistical Office and other statistical authorities (in particular Eurostat).

2. Changes in the taxation of selected groups of goods

2.1. General

It is worth noting that the solutions adopted in the amending act correspond in principle to its purpose, significantly simplifying the decoding of the scope of preferences. The amendments provide for uniform catalogues of goods benefiting from reduced VAT rates (for 8% and 5% VAT rates) applicable to both domestic sales and imports.

The repetitions of individual goods, which have so far both been eliminated In Annex 3 to the VAT Act Act (8% VAT rate) and In Annex 10 (5% VAT rate).

Finally, the VAT system for goods is based on a CN which is an extensive tool for classifying goods, established within the EU for the purposes of the Common Customs Tariff and trade statistics carried out by EU Member States.

It therefore appears that the scope of the individual headings of the Annexes to the VAT Act indicating the goods subject to the rate preferences — by referring to the CN at a fairly general level (essentially two or four CN numbers) should, in principle, facilitate taxpayers' choice of the appropriate rate (more so that they can benefit from numerous clarifications and extended practice in the application of the CN).

2.2. Elimination of absurds – mustard, yogurt, spices

On the ground the VAT Act – before the amending law, there are many examples of non-intuitive and incomprehensible taxation of individual products by different VAT rates. For example, in the light of the pre-Law amending mustard, it was taxable 23% VAT rate – other than mustard sauce, taxed 8% VAT rate.

On the other hand, yoghurts could essentially benefit from 5% VAT rates, but the addition of cereals may have led to the need to apply 8% VAT rates.

However, it should be stressed that, by covering the reduced VAT rates of the entire CN divisions, the amending act eliminates a number of at-risk absurdities (including those mentioned in the example).

This is also the case for spices where rates may have been applied 5%, 8% and 23% (depending on the specific composition and method of processing of the spice concerned). With regard to these goods, the amending act significantly simplifies the rate regulation, providing in principle 8% VAT rate for spices.

2.3. Less VAT on vegetables, fruit and nuts

Before the amending act, the VAT Act provided for a 5% VAT rate on selected vegetables, fruit and nuts. For example:

• 1) 5% VAT rate could be applied to the sale of frozen peas, but canned peas were already taxable 8% VAT rate,
• 2) 5% VAT rate applied to apples but not to bananas (8% VAT),
• 3) from a preferential rate 5% only walnuts and hazelnuts could use this possibility, e.g. for macadamia or cashew nuts.

These regulations have been substantially modified in the new VAT rate matrix. By scope 5% VAT rates of the whole CN division (widely covering certain categories of goods) Act amending the standardization of the VAT rate applicable to all fruit, vegetables and nuts at the level 5%.

1. 4. Bakery and pastry products – extreme simplification?

On the ground the VAT Act (Before the amending Act, there were many criteria (often very complex) to apply reduced VAT rates to bakers' and pastry products. Apart from the shelf life, these include the presence of preservatives, water content or sugar or fat content in the dry matter of the product.

New VAT rate matrix – by reference to section 19 CN – almost completely abandons any criteria in this respect, allowing taxation 5% The VAT rate for almost all bakers' and pastry products, regardless of their shelf-life (including products which so far could not benefit from a reduced VAT rate, such as gingerbread, sweet biscuits, waffles, etc.).

Technically, such a solution seems very beneficial to taxpayers, as it removes the burden of tracking detailed classification nuances.

However, the scope of simplification may raise doubts – questions will certainly arise as to whether products containing preservatives, with a prolonged date for consumption, should be taxed as much as fresh products without preservatives and subject to the existing preference as ‘products’ first Needs’.

By preferential treatment, the existing regulations encouraged the production of products with limited shelf-life, without preservatives. The new VAT rate matrix appears to no longer motivate producers in this area.

1. 5. Health-related goods – fewer regulations, less preferences?

So far regulations the VAT Act provided for the possibility of use 8% VAT rates for medical devices (as defined by the Act of 20 May 2010 on medical devices 8 , further: u.w.m.) and many health-related products – regardless of their qualifications as a medical device. List of goods included second The group was quite large and included, among others:

• 1) components and replacements for orthopaedic, rehabilitation and prosthetic products – wooden (PKWiU ex 16.29.14.0),
• 2) flat film and photographic plates for X-rays, for medical, dental and veterinary uses, photographic film in X-ray rolls, for non-industrial uses only medical use (PKWiU ex 20.59.11.0),
• 3) diagnostic X-ray membranes,

1. Tests and diagnostic reagents, medical, wax-based dental materials, in retail packings, plaster-based dental materials, modelling pastes and other preparations, preparations for use in plaster-based dentistry, other prepared micro-organism culture media only for pharmacy (PKWiU ex 20.59.52.0),
2. products and preparations for pharmaceutical and surgical uses (excluding articles of precious ceramics) (PKWiU ex 20.59.59.9),
3. rubber medical hoses (PKWiU ex 22.19.30.0),
4. surgical gloves (PKWiU ex 22.19.60.0),
5. steel rivets for orthopaedic, rehabilitation and prosthetic products (PKWiU ex 25.94.12.0),
6. Braille computer equipment for dark (PKWiU ex 26.20.30.0),
7. cardiac stimulants, hearing aids (PKWiU ex 26.60.14.0),
8. Typewriters for blind (PKWiU ex 28.23.11.0),
9. parts for tools, instruments, apparatus and equipment for general medicine, for sterilisation of tools, disinfection, purifying, etc. (PKWiU ex 28.25.30.0),
10. Braille printing machines (PKWiU ex 28.99.12.0),
11. wheelchairs (excluding parts and accessories) (PKWiU ex 30.92.20.0),
12. syringes for medical treatment, surgery, dentistry or veterinary use – excluding veterinary syringes, injection needles for injection for medical use – excluding veterinary needles, needles (excluding metal injection needles or stitches) – excluding veterinary needles, instruments and apparatus for measuring blood pressure, transfusion apparatus (PKWiU ex 32.50.13.0),
13. Artificial joints, orthopaedic appliances and apparatus, artificial teeth, dental prosthetics, prosthetics of other parts of the body, n.e.c. (excluding artificial teeth and dental prostheses)PKWiU ex 32.50.22.0),
14. parts and accessories of prosthetics and orthopaedic instruments (PKWiU ex 32.50.23.0).

The new VAT rate matrix waives the indication of the individual goods listed above, providing for the possibility to apply 8% VAT rates only for products constituting medical devices within the meaning of U.W.

Of course, some of the goods indicated above will continue to be subject to the possibility of use 8% VAT rates because they fall within the definition of medical devices. However, it seems that some of the items mentioned above may be accompanied by significant doubts in this respect (e.g.

computer devices for Braille's writing, X-ray films, etc.).

It should be noted that in the latest interpretative practice, tax authorities do not consider medical devices – for VAT purposes – to be medical devices.

In addition, there is a general interpretation by the Minister of Finance indicating that there is no possibility of application 8% VAT rates for parts (including spare parts) of medical devices, unless directly indicated in other items entitling to apply a reduced VAT rate[9].

With this interpretation, the application of a reduced VAT rate to, for example, parts and accessories of prostheses and orthopaedic instruments (PKWiU ex 32.50.23.0) seems incompatible with the new VAT rate matrix.

2.6. Seafood and snails – exclusion of preferences

The new VAT rate matrix explicitly excludes the possibility of using 5% VAT rates for lobsters and octopus and other goods covered by the CN 0306 – CN 0308 (taxed to date 5% VAT rate). In order to decode precisely the scope of this exemption, it cannot be concluded that it concerns lobsters and octopus, as the CN heading must be reached from 0306 to 0308, which are also excluded from the scope 5% VAT rates. So:

• 1) CN 0306 includes, inter alia, langostes and other sea craces, lobsters, crabs, shrimp,
• 2) CN 0307 include oysters, scallops, bivalve molluscs, cuttlefish and squid, octopus, gastropods (other than marine gastropods), pectoris, pears, wings,
• 3) CN 0308 includes sea cucumbers, sea urchins, jellyfish.

The relevant exemption is also provided for processed products resulting from the above products (excluding from section 16 CN). The analysis of the above regulations raises many reflections. First, notes the detailedness of the CN listing the most exotic animal species, which may reflect the extent and complexity of this regulation.

Furthermore, it is not possible to pass indifferently alongside the exclusion of snails from the possibility of applying a reduced VAT rate. Snails are popular in Poland mainly due to favourable conditions for breeding, often conducted for foreign markets.

The cultivation of snails is such a growing industry that it seems at least surprising to exclude it from preferences. This procedure wonders even more when we will consider that with 5% VAT rates can be used, for example, by shark fins (CN code 0303 92).

1. 7. Supply of goods and the provision of catering services – the primary role of PKWiU

The issue of taxation of the sale of goods in simple gastronomy schemes seems to bring together all the major disadvantages currently functioning (i.e. to 1 April 2020) VAT rate system.

Implicit position of the statistical classification, the lack of the possibility of binding confirmation of the applicable PKWIU groupings, individual interpretations confirming the possibility of applying a reduced VAT rate, subject to the correctness of the classification by the taxpayer, and finally the general interpretation questioning the meaning and protective power of individual interpretations (cf.

the general interpretation of the Minister of Finance from 1 July 2016) 10 – These circumstances have led to numerous disputes between taxpayers and the tax authorities for the right to apply 5% VAT rates likely to be settled by the TSEU in response to a preliminary question by the NSA In one of such matters[11].

General interpretation of the Minister of Finance from 1 July 2016

The statistical classification of the goods or services indicated by the Applicant in the request for an individual interpretation is an element of the facts (future event) which the tax authority is obliged to take into account when issuing an individual interpretation — it is not possible to verify. The application by the taxpayer to an individual interpretation, issued in relation to a factual situation (future event) which deviates from the actual situation in a way that affects the assessment of the legal consequences of the tax, does not protect the taxpayer under the conditions arising from Article 14k-14m Act on 29 August 1997 - Tax Ordinance 12 (hereafter, O.P.).

The new VAT rate matrix aims to eliminate confusion in this respect, providing that the reduced rates indicated in the Annexes to the VAT Act only goods and services other than those classified according to PKWIU may be used 56 „food services’. At the same time, the amending law assumes the introduction of a provision directly into the VAT Act (not to the Annexes) – providing for the possibility of application 8% VAT rates for food-related services (excluding spirits, etc. – PKWiU ex 56).

This change to first A glance confirms the current practice of tax authorities, but on the part of taxpayers there may be many doubts:

• 1) What extent of information should be provided in the application for a WIS?
• 2) what is the scope of the PKWiU grouping 56 and on what basis is this range determined?
• 3) What impact will possible CSO publications (or other statistical authorities, e.g. Eurostat) have on the taxation of goods and on the scope of the reduced VAT rates?
• 4) and finally the most important for shellfish fans – whether even the symbolic addition of grilled shrimp to the restaurant should change the price of the prepared meal by 15 percentage points?
• 2.8. Lower VAT on e-books from 1 November 2019

The recognition should be given to the use by the legislator of the possibility of reducing the VAT rate to e-books, formally created by the amendment of the VAT Directive (cf. Directive 2018/1713 to 6 November 2018 amending Directive 2006/112 for the rates of value added tax applicable to books, newspapers and periodicals 13 ).

To date, despite many years of discussion on the possibility to apply reduced VAT rates to e-books, the TEU has consistently argued that this possibility is not provided for in the VAT Directive. Therefore, in order to allow EU Member States to tax preferential electronic publications, it was necessary to amend EU regulations.

It is worth noting that according to the amending law 5% the VAT rate can be applied to printed and electronic books – not even marked with the ISBN number. Importantly, the change in the rate for e-books came into force earlier than the others, as already 1 November 2019

2.9. Feed and fertiliser – different basis, same rate

In the case of fertilisers and feed, the legislator assumes essentially a departure from the statistical classification.

The provisions of the amending law eliminate many of the existing specific items, often relating to specific PKWiU groupings 2008, in return predicting that with 8% VAT rates will be available for the use of ‘Fertilisers and plant protection products — usually intended for agricultural production, and feed and feed for livestock and domestic animals’, regardless of their classification.

Nor does the above mentioned amendment provide for the purchaser (a farmer) to make claims on the use of the product, which in the current state of the law are one from the conditions for applying a reduced rate to selected fertilisers and feed.

The new regulations may provide opportunities to apply a preferential rate to products which have so far been excluded from the preferences due to unfavourable statistical classification. In practice, it may also be easier to eliminate the obligation to make declarations of destination. However, the departure from the statistical classification can deprive taxpayers of many indications on the actual scope of preferences.

2.10. Rate 5% for juices at the expense of firewood

Published 9 November 2018 The design of the new VAT rate matrix provided for fundamental changes in the VAT treatment of various types of fruit drinks. Initially, the legislature assumed that preferences would be eliminated in the form of 5% VAT rates for non-gasted beverages containing a minimum in their raw material composition 20% fruit juice. On the basis of the new matrix, such products were to be taxed at the basic rate, i.e. 23%, and the preference was to be maintained only for juices 100%.

This procedure was undoubtedly a consequence of the need to finance simplifications implemented with a new matrix, often resulting in a reduction in the VAT rate on broad groups of goods (e.g. bread).

Understandably, this proposal has received great criticism, particularly from juice producers and orchards.

The views on the legitimacy of the solution initially presented by the legislator were strong enough to lead to a temporary suspension of work on the new matrix and consequently to a postponement of the date of entry into force of the new regulations (first a version of the draft amending act considered by the Sejm assumed its entry into force 1 January 2020).

However, a compromise was reached during the parliamentary work on the amending law. The preference for beverages has been preserved in almost unchanged shape, but the VAT rate has been increased to 23% for firewood, which has so far been using reduced 8% VAT rates.

3. Binding Rate Information – Characteristics

1. 1. General comments – definition, scope and elements of Binding Rate Information

Binding Rate Information is to be a document giving the taxable persons certainty as to the accuracy of the VAT rate applied. Detailed regulation for the institution can be found in the new Chapter 1a the VAT Act entitled ‘Limited Rate Information’.

Its nature corresponds to the JTI to confirm the accuracy of the CN codes for customs purposes. It seems that it is the common denominator for the new VAT rate matrix and customs regulation, which will be CN, that inspired the legislator to create a VAT equivalent instrument to JTI.

Content Article 42a the VAT Act as amended by the amending Act, Binding Rate Information is to constitute a decision to be taken for the purposes of VAT on supplies of goods, imports of goods, intra-Community acquisitions of goods or services, containing:

1) a description of the goods or services subject to the VIS;

2) classification of goods by heading, heading, subheading or CN code, either by section, division, group or class of PKOB, or by service by division, group, class, category, subcategory or item of PKWIU necessary for:

• (a) determine the rate applicable to the goods or services,
• (b) the application of the provisions of the Act and the implementing provisions adopted on its basis in the case in question under Article 42b(4) the VAT Act as amended by the amending Act;
• 3) the tax rate appropriate to the goods or services.

It is worth noting when examining the scope of the WIS that Article 42b(4) the VAT Act – as amended by the amending Act, provides that the application for a WIS (which costs 40 PLN) may include a request for classification of goods or services for the purposes of applying VAT regulations other than for the determination of the rate of tax.

The extension of the scope of the WIS should in principle be assessed positively, although it is difficult to imagine a different approach by the legislator in this regard. It would not be justified to leave other areas of VAT regulation referring to the statistical classification (e.g.

the reverse charge mechanism) of the ‘old’ regime for classifying goods or services for VAT.

However, by compiling the above regulations directly concerning the WIS with the substantive rules on VAT rates (or other VAT institutions based, at least in part, on statistical classifications) there can be doubts as to the scope of the WIS. These are cases where, in principle, the reference to statistical classifications does not refer to statistical classifications for selected goods or services. For example, e-books (using a reduced rate from 1 November 2019 – regardless of classification).

Given that the CIS is to indicate the statistical classification of a particular product or service, it is appropriate to ask whether that institution will also apply to goods and services not covered by the classification.

In the course of the work on the bill amending the above issue, the Legislative Council at the Prime Minister, who, addressing the first draft new VAT rate matrix 14 , stated that: ‘It should be clarified that the classification thus requested by the applicant [i.e.

in respect of regulations other than those relating to VAT rates, the author] may refer only to classifications according to CN or PKWIU, respectively, as only by that classification can the goods or services in question be classified in the form of a decision issued by the Authority, Binding Rate Information’ 15 .

However, it seems that such an understanding of the above rules would conflict with the objective of introducing the WIS and would unduly differentiate the position of taxpayers – because of the goods or services they are trading.

However, second parties to the wording of the provisions in question in fact provide grounds for rejecting applications for a WIS, in particular in the case of inquiries concerning other than rates of VAT regulation areas where those regulations do not refer to the statistical classification of a particular commodity (as is the case for waste and reverse charge mechanism).

Notwithstanding the above, it should be noted that the proposed WIS institution will be competitive for institutions to interpret individual tax legislation. In this respect, the legislator has decided to exclusivity the CIS, stating explicitly that, in the scope of the CIS, individual interpretations do not appear (Article 14b(1a) o.p.

in the version given by the amending Act).

3.2. Entities entitled to apply for Binding Rate Information

As expected Article 42b(1) the VAT Act as amended by the amending Act, the VIS is to be issued on request:

1) a taxable person with a tax identification number (NIP),

1. entity other than that mentioned Under point 1, performing or intending to carry out the activities in question under Article 42a the VAT Act as amended by the amending Act (i.e. supply of goods, import of goods, intra-Community acquisition of goods or provision of services),
2. the contracting authority within the meaning of the provisions of the Act of 29 January 2004 u.p.z.p. – to the extent that the method of calculating the price in connection with the public contract awarded is affected.

The scope of entities entitled to apply for the CIS deserves approval. The addition of legislative work should be particularly positive point 2 (This includes entities that do not have NIP. Such a regulation will certainly ensure a level playing field for taxpayers and operators who are just about to start an economic activity.

Similarly, reference should be made to the provisions entitling the contracting authority (within the meaning of the Act of 29 January 2004 Public Procurement Law 16 – Further u.p.z.p.) to apply for WIS.

Such a standard undoubtedly creates opportunities for the training of practice among the awarding entities, which tends to occur every time the WIS is awarded.

Such an approach could eliminate doubts about the rates of VAT in public procurement, often leading to an extension of tendering procedures, as well as an abuse of the use of reduced VAT rates to indicate the lowest possible price in bids.

In the context of the catalogue entitled to apply for a WIS only on the margin, it should be noted that, as regards taxpayers with a NIP, the amending act does not provide for additional conditions to be fulfilled in order to effectively apply for a WIS.

The linguistic interpretation of the above regulation gives the view that any taxable person holding a NIP may apply for a WIS in respect of a given commodity or service, even if the product or service in question does not sell or purchase. (...).

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2: i.e. Journal of Laws of 2020, item 106.

3 reference no. PT1/033/32/354/LJU/14, Legalis.

4 In general practice, the interpretation authorities did not classify the goods for the purpose of determining the appropriate VAT rate, assuming that the classification constitutes an element of the facts (cf. the individual interpretation of the Director of KIS from 2 June 2017, reference no. 0113-KDIPT1-1.4012.144.2017.2.ŻR, Legalis).

This issue was subject to judicial review. In one of the NSA judgments, it was indicated that in such cases the interpretative body should also decide on classification, but this view did not significantly affect the practice of the authorities (cf. NSA judgment of 29 November 2017, reference no. I FSK 179/16, Legalis).

5 Nomenclature introduced by Council Regulation (EEC) No 2658/87 to 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (OJ L 256 to 7 September 1987, p. 1, as amended).

6 Cf. the case hangs before the WSA in Warsaw, settled by a final judgment with 17 May 2017, reference no. III SA/Wa 1890/16, Legalis.

7 In practice, due to the parallel application of the CN and the Harmonised System, the understanding of the term ‘subheading’ may vary, depending on whether that phrase relates to the CN or the Harmonised System. This publication uses the conceptual grid used by the projector in the explanatory memorandum of the amending law.

[8] i.e. Journal of Laws of 2020, item 186

9 General interpretation of the Minister of Finance from 29 December 2015, reference no. PT1.050.12.2015.ALX.572, Legalis.

10 reference no. PT1.050.3.2016.156, Legalis

11 Cf. NSA’s resolution from 6 June 2019, reference no. I FSK 1290/18, Legalis.

14 Draft law on 8 November 2018 amending the Goods and Services Tax Act and the Act – Tax Ordinance.

15 Opinion of the Legislative Council at the Prime Minister of 5 December 2018 about the bill of 8 November 2018 amending the Goods and Services Tax Act and the Act – Tax Ordinance.