Due to the coronavirus pandemic, the Ministry of Finance encourages companies that have fallen into financial trouble to apply for relief in the payment of tax liabilities.
In practice, it is a matter of postponement of payment of the tax, distribution of it into instalments or remission of tax arrears. According to the announcement by the Ministry of Finance, applications made by entrepreneurs under the procedure Article 67a and Article next. Tax Ordinance will be considered First,.
Let us remind you that the speciality passed provides that, in the event of postponement of the payment deadline or payment of taxes and tax arrears constituting the revenue of the state budget, on the basis of a request made during the period of the epidemic or epidemic emergency, either during the period 30 the days following their cancellation, no extension fee shall be charged.
However, the tax relief institution is of a discretion. What, then, if a positive decision is received to grant a waiver in the form of a waiver of interest or a decision not to grant the reduction requested?
In the event of a positive decision to waive interest, the taxpayer does not have to pay interest for late payment due by the date of the application for the relief (including that date). On the other hand, the positive decision will not stop further charging of interest on late payment. There is still tax arrears. Further interest on the delay shall be charged from the day following the day on which the application for the relief was lodged.
On the other hand, if a decision to refuse to grant the reduction is received, the taxpayer who did not pay within the time limit of tax will also have to pay the interest calculated from the first day of the delay.
Interest on late tax arrears – two interest rates
According to Article 56-56b Tax Ordinance distinguish three interest rates on tax arrears:
- 1) basic - sum 200% the basic interest rate on the pawnhold loan, established in accordance with the provisions of the NBP. It is currently 8%.
- 2) decreased - 50% the basic rate applicable to liabilities arising after 1 January 2017. The current reduced rate is 4%.
However, it should be borne in mind that the reduced interest rate for late payment may be applied only if the following conditions are met:
- • submitting a legally effective correction of the declaration no later than the time limit 6 months from the date of expiry of the time limit for submission of the declaration,
- • payment of tax arrears in time 7 days from the date of submission of the correction of the declaration.
The reduced interest rate on late payment shall not apply in the event of a correction of the declaration:
- • submitted after the notification of the intention to initiate a tax audit, and in cases where the notification does not apply, after completion of the tax audit;
- • the authorisation to carry out customs and fiscal checks after service;
- • carried out as a result of checking operations.
- 3) - increased 150% the basic rate. It is currently 12%.
The increased rate of interest on late payment shall apply to VAT arrears and excise duties in the case of:
- understated tax liability, over-payment or reimbursement of the tax disclosed by the tax authority in the course of tax control, customs-tax control or tax proceedings;
- Revision of the declaration:
- submitted after the notification of the intention to initiate a tax control, and in cases where the notification does not apply, after completion of the tax control,
- performed as a result of checking operations,
- the authorisation to carry out customs and fiscal checks,
- if the amount of the understatement of the tax liability, the excess amount of the overpayment or refund exceeds 25% the amount due and is higher than five times the minimum remuneration within the meaning of Act dated 10 October 2002 with minimum wage for work (Journal of Laws of 2015, item 2008; of 2016, item 1265), in force on the day following the expiry of the time limit for payment of the undertaking or for reimbursement;
- disclosure by the tax authority in the course of checking, tax control, customs and tax control or tax proceedings of non-declaration, despite the mandatory and non-payment of the tax.
It is worth noting that the calculation of the amount of interest and their payment to the account of the office is the duty of the taxpayer.
It should also be recalled that it is clear from the provisions of the Special Act that the Minister of Finance may, by means of a regulation, waive, in whole or in part, the collection of interest on late tax arrears, specifying in particular the nature of the tax, the territorial scope of the omission, the period during which the omission occurs and the group concerned by the omission, having regard to the duration of the epidemic and the state of the epidemic.
COVID-19 and its effects. Until now, however, such regulations have not been issued.
When you don't charge interest on delay?
Article 54 Tax Ordinance provides for situations where interest on late payment is not charged. These are the following cases:
- • for the period of the security, from the secured amount of the liability if the cash covered, including the amounts obtained from the sales covered by the security of the goods or rights, has been credited against the tax arrears,
- • for the period from the day following that of expiry 14-the day-limit for the transmission of the appeal by the Authority first the Court of Justice of the European Union,
- for the period from the day following the expiry of the time limit for the decision of the appeal authority until the date of notification of the decision if it has not been issued within the time limit (the appeal authority has to issue the decision 2 months from the date of receipt of the appeal and in the case of cases in which the hearing was held or the party applied for it - 3 months),
- in the event of suspension of proceedings, from the date of the decision to suspend proceedings until the date of service of the decision to take the suspended proceedings,
- if the interest does not exceed 8.7 PLN,
- for the period from the date of initiation of the tax procedure until the date of notification of the decision of the authority first instances where the decision has not been served within the time limit 3 months after the initiation of the procedure,
- for the period from the day following that of expiry 2 years from the date on which the declaration was made, from the backlog of accounting errors or manifest errors made in the declaration, if they were not disclosed by the tax authority during that period,
- for the period from the date of submission of the request for a specific decision under Article 119zfa(1) Tax Ordinance by the date of withdrawal of the tax avoidance effects in accordance with Article 119zfk(1)(2) Tax Ordinance from tax arrears associated with the achievement of the tax advantage.
Interest on tax arrears and suspension of time limits
According to the current speciality at the time of the outbreak or epidemic outbreak COVID-19 Procedural and judicial time limits are suspended, including checks and proceedings based on Tax Ordinance, Customs and Tax Controls, Judicial and Criminal Tax Procedures.
Therefore, when the authority of the first instance completed the tax investigation and issued an indeterminate decision requiring a tax surcharge and subsequently entered into force a special law suspending procedural time limits, the time limit for bringing an appeal against the tax ruling was suspended. This means that the taxpayer may, but need not, appeal until the outbreak has ended or the epidemic has been threatened.
Moreover, the taxpayer does not have to pay the tax until the final decision is received. Only the final decision is the basis for executing the taxpayer.
What about interest on tax arrears in the period of suspension of proceedings ?
As indicated above, according to Article 54(1)(4) Tax Ordinance, the absence of interest on late payment occurs in the event of suspension of proceedings only ex officio and not in the case of a statutory suspension of time limits.
It therefore appears that interest on tax arrears is still being charged during the suspension of the time limits under the special law.
So it is worth examining your chances of winning a dispute with the body by deciding whether it is during or after the outbreak. If we are able to regulate the tax and our chances of winning with the tax authority are little worth paying the tax as soon as possible. This will avoid paying any interest on tax arrears.
It is also worth noting that the payment of the tax does not cause us to lose the possibility of repealing a decision we disagree with. The dispute with the body will continue, but the interest on the backlog that we will have to pay in case of loss does not increase.
Therefore, depending on the specific situation, it may be more beneficial for the taxpayer to pay the tax resulting from the decision of the authority of the first instance and to seek reimbursement at subsequent stages of the procedure.