Instead of the announced list of due diligence, we have at our disposal a methodology for assessing the due diligence of buyers in domestic transactions. A methodology aimed at officials, in fact, without a binding nature for entrepreneurs. The CoRP calls for further work on due diligence guidelines and adaptation of the methodology to changing market practice.
Intra-Community carousels
one from incorrect assumptions The methodology is to limit the scope to domestic transactions only, while honest taxpayers can be involved in tax fraud also when making intra-Community supplies, which may expose them to the removal of the right to apply the rate 0% VAT.
“First of all, however, the CoR deplores that taxpayers will still not have any formal protection from judging them for lack of due merchant care.
It should be noted that the methodology only provides an open set of the most important circumstances which should draw the attention of traders in the course of the planned transactions and an example of a list of activities that a diligent taxpayer should carry out when checking the counterparty.
This means that, in the course of their business activities, taxpayers will still not be sure that their verification activities will be considered sufficient by the tax authorities to secure the VAT settlement of taxable persons.
However, we hope that the MMF guidelines contained in the Methodology will be seen by representatives of the National Tax Administration as a unified "road guide" for entrepreneurs to facilitate their due diligence in relations with counterparties" – stated the adopted position.
one from incorrect assumptions The methodology is to limit the scope to domestic transactions only, while honest taxpayers can be involved in tax fraud also when making intra-Community supplies, which may expose them to the removal of the right to apply the rate 0% VAT.
Rules should apply in all proceedings
The Chamber concluded that the principles of Methodology should apply not only to procedures concerning the regularity of VAT settlements initiated after publication of the Methodology in question, but to any proceedings opened on the date of its issue.
A different procedure would lead to different due diligence patterns depending on the time when the individual control activities were initiated.
It should also be a natural consequence of the above to assess the due diligence of cases currently pending before the Directors of the Chambers of Tax Administration in the course of the appeal procedure in the light of the principles of the Methodology, regardless of the pattern of due diligence adopted in the contested first instance decisions.
„At the same time, in view of the open list of activities that a diligent taxpayer should carry out when checking the counterparty and the circumstances of the transaction, we hope that the tax authorities will not abuse the concept of due diligence by expecting taxpayers to verify their business partners without any limit. In our view, it is necessary to maintain a balance between the imposition on the taxpayer of obligations that effectively inhibit VAT fraud, but which - from the other parties will not exceed what is a legitimate expectation of taxpayers. For example, it is difficult to generally require that a taxable person controls the ability of a counterparty to deliver the goods in question or to have a place to store them (or other organisational facilities)’, says the CoRD’s position.
Work on due diligence should continue. The Ministry could also consider clarifying doubts in the form of a general interpretation or tax clarifications in question. Under Article 14a(1)(1-2) Act dated 29 August 1997 Tax Ordinance; i.e. Journal of Laws of 2018, item 800
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 language editing of the text at the University of Warsaw.