The government is working on legislation that will in practice block the possibility of reimbursement of overpaid VAT to a large group of entrepreneurs. If someone has added VAT to the price of, for example, a cinema ticket despite the lack of such an obligation, the tax will not return anything. According to the government, recovering overpayment would be... A baseless enrichment.
Tax subject matter is one of the most complex departments of law, which are subject to constant change. VAT-exempt activities are laid down in the Act. However, this does not mean that there are no doubts here.
For example, preventive medical examinations are exempt from VAT, but the same is not covered by this privilege if they are carried out for expert or evidence purposes. That's not an exception. More like first an example that shows the degree of complexity of the subject. These cases may be problematic for tax advisers. No wonder the entrepreneur might be wrong, too.
The entrepreneur wrongly takes consumers
The basic VAT rate is currently 23% In practice, the consumer does not distinguish the amount without VAT and the added tax. Both of these elements represent a total amount due at the cash register. From the entrepreneur's side, it looks completely different. The amount of VAT at his disposal is only temporary, he must almost immediately transfer it to the account of the tax office.
What should be done when an entrepreneur added to the VAT price, even though he did not have to? According to the government, a refund of the seller's VAT would be unfair if it was paid by the consumer. The VAT amount should then be paid to the customer. The search for all purchasers is obviously impossible and therefore the wrongly collected VAT should remain on the State Treasury side. It seems logical, but market reality denies it.
A higher price can reduce income
It's no secret that a higher price means less demand. This. one of fundamental economic rights. If the entrepreneur sets the price per 123 PLN instead of 100 PLN, amount 23 PLN Unnecessary VAT is more than a neutral factor for the consumer. From this point of view, repayment of overpaid VAT could be a kind of compensation for unfairly reducing turnover.
Adding unnecessary VAT does not have to be negligence
The complexity of tax law is probably a matter known to everyone, not just to entrepreneurs. Account should also be taken of the above-average number of amendments to be made each year and of changes to the case law of the administrative courts. It is also not unusual for tax authorities in different voivodships to have a different practice.
Entrepreneurs must not only plan their business well, but also find themselves in the thicket of legal intricacies. The subject matter of VAT (especially the application for reimbursement) has been associated with fraud or fraud for some time. However, not all entrepreneurs are prone to abuse. The strategy of the government and tax authorities should seek a golden measure rather than ruthless firmness.
Source: Forbes
Author:
Andrzej Dmowski
Managing Partner Russell Bedford, Doctor of Legal Sciences, Lawyer, Tax Advisor, Restructuring Advisor, Certified Public Accountant – Expert Auditor in Ireland, Certified Fraud Examiner - Expert in Crime Detection and Abuse, Certified Internal Controls Auditor - International Internal Auditor.
Graduate of the University of Cambridge - British Centre for English and European Legal Studies - Faculty of Law and Administration, Graduate and Fellow of the Faculty of Law and Administration of the University of Warsaw.
Specializes in settlement of transactions between related entities - transfer pricing, legal and tax aspects of M&A and issues concerning derivatives of financial instruments.