On 30 December 2014 The Council of Ministers adopted a draft law amending the Goods and Services Tax Act – the planned amendment is intended to constitute the next stage of the adaptation of tax rules to EU legislation. The bill defines a single transaction as a situation in which one the contracts are delivered on the basis of separate orders. The most important changes envisaged in the project are:
Determination of the proportion in deduction of input tax in the case of the acquisition of so-called mixed goods and services used for both taxed and non-taxed activities
It has been proposed that the VAT Act should introduce examples of methods of determining the proportions to be based on:
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- the number of persons carrying out economic activities;
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- the number of man-hours for business-related work;
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- the annual turnover of the taxable person in the annual turnover from all sources;
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- area used for business activity.
Clarifying the application of the so-called relief for bad debts.
The proposed amendment is intended to include a regulation that excludes the obligation for the debtor to adjust the input tax if it remains at the end of the month in which it expires 150. the date from the date of expiry of the payment deadline laid down in the contract or invoice, in insolvency proceedings or in liquidation.
Implementation of the reverse charge mechanism on domestic trade.
In the case of goods such as: gold (unworked, investment, gold and gold jewelry), certain goods made of steel, laptops, tablets, mobile phones, game consoles will be mandatory to settle VAT using the reverse charge mechanism. The application of the reverse charge mechanism is to be compulsory only if such goods are traded by taxable persons registered as active VAT payers, after exceeding the limit 20,000 PLN.
This limit is to be applied to the taxable person’s ‘economically uniform transactions’.
The bill defines a single transaction as a situation in which one the contracts are delivered on the basis of separate orders. A single economic transaction is also intended to be a situation where, on the basis of a number of contracts, the supply of the above goods has been made if ‘the circumstances or conditions relating to that transaction diverged from those normally occurring in the trade.’
Extension of the use of summary information
The draft provides for the obligation to submit summary information in the cases referred to in Article 17(1)(7)(8) VAT Act – i.e. in cases where the reverse charge mechanism is applied in domestic transactions, and therefore, inter alia, in cases covered by the previous point.
This is to be a new type of summary information defined as ‘National summary information’. The bill provides for the creation of an appropriate form by the Minister of Finance.
Changes in the use of guarantee bonds
The draft law provides for an increase in the minimum and maximum guarantee deposit to the value respectively 3,000,000 PLN and 10,000,000 PLN in the case of fuel trading (motor petrols, diesel fuels, internal combustion engine gas and fuel oils and lubricants).
On the basis of the above draft amendments, the authors indicated that the VAT Act should be brought more fully into line with EU law and the case law of the Court of Justice of the European Union (TEU). This applies primarily to the judgment in the case C-511/10 ori dic C-437/06 as regards the introduction of examples of methods to determine the proportion of goods and services used for mixed purposes.
The proposed extension of the application of the reverse charge mechanism in national trade (and the resulting introduction of summary information in national trade) is justified by the need to seal the VAT system and reduce VAT fraud in transactions involving goods considered particularly vulnerable to fraud. The extension of the reverse charge mechanism, as intended by the authors, is intended to combat organised forms of VAT fraud, known among others as carousel offences.
The entry into force of the revised provisions of the VAT Act is planned for 1 April 2015
Changes related to the method of determining the proportion for mixed services and goods are to enter into force from 1 January 2016