Tax changes: less private bank accounts

Government introduced changes in Tax Ordinance, which are intended to contribute to an even stronger sealing of the tax system. This time, bank accounts and their control and the possibility of blocking were at the centre of the tax authorities' attention.

Previous legislation allowed a short-term blocking of the bank account, which creates suspicions about the integrity of the owner. The temporary blockade was intended to prevent, for example, the transfer of funds abroad to avoid taxation in the country.

According to changes in Tax Ordinance 1 , blocking the bank account 72 hours is not subject to appeal.

The head of the National Tax Administration will not recognise the appeal measure in this regard and, consequently, such a block cannot be challenged before the administrative court.

The blockage, however, is to be subject to appeal in the form of a complaint to the Head of the National Tax Administration. If the complaint is not handled positively, there will be a possibility of bringing a complaint to the administrative court.

The Ministry of Finance argues that the purpose of the change was to pursue the consistency of the rules on blockages for a short period of time, because in the Polish legal system the principle is not to challenge the blockages for a short period of time, if the blockade is not done at the request of the prosecutor.

According to the Ministry, short-term bank account blockade is preventive and must at the same time ensure the confidentiality of operational activities.

Request for information on request for blocking the account

According to the Act, banks or Credit Unions will inform about a request for blocking on request. The Impact Assessment states: “The Bank or the SKOK will be able to provide the qualified entity, upon request, with information on the Chief of National Tax Administration’s request for blocking. If the above-mentioned application is submitted, the bank or the SKOK will also provide the Head of KAS with information on e-mail address of the sender of the request, IP address, telephone number (...)’ 2 .

The quoted passage indicates that filing an application for information on the blocking of the account will reveal a number of data to the tax administration, such as the IP address of the computer from which the bank account is operated. Further, the impact assessment can be read: ‘This information may be useful for determining the location of the entity and for the possible appropriate action by the Head of National Tax Administration or other competent authorities’.

The paradox is that the request for information is, at least theoretically, a means of protection, but the use of it will result in concrete powers being taken by the tax administration (data collection).

IP Number Information

Amendment Tax Ordinance In addition, the scope of the information provided by the banks and the SKOK-i has been extended. This is primarily about IP numbers that were logged in to handle the bank account.

The draft amendment provided for: "Extension of the scope of information and compilations sent daily by banks, credit unions and clearing houses.

The extension relates to: available IP addresses, from which there has been online logging into the service for the account of a qualified entity (...), information about other blocking and seizure of receivables and information about the identification of the proxy for the account of the qualified entity, the representative of the qualified entity and its beneficial owner (...)’ 3 .

This passage points to a tendency to expand the scope of the tools to control taxpayers. Internet space is becoming less anonymous and electronic data more accessible to state authorities.

Against Foreign Transfers

Another change is related to the functioning of the split payment scheme.

The Act provides for blocking the possibility of transfer abroad in a ‘VAT’ account: ‘it limits the possibility of charging the VAT account in order to make payments to the account of the recipient operated by a foreign bank or credit institution which does not operate in the form of a branch in the territory of the Republic of Poland, i.e.

the possibility of transferring funds from the VAT account abroad is blocked, as this transfer would occur outside the split payment mechanism’ 4 .

The cited justification of the Act points to the advantage of split payment in the form of anti-tax fraud, but ignores the question of potential obstacles to small businesses. The essence of this system is to restrict the possibility for the taxpayer to have funds.

More countries in the exchange of information on reported accounts

International tax cooperation between countries is increasing and the list of countries participating in information exchange programmes is increasing. According to the Ministry of Finance, the full list of countries which undertook to participate in the exchange of information on reported accounts has not been published In 2017 due to legislative delays in some countries. It is therefore necessary to complement the list of so-called participating jurisdictions.

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1 Act of 5 July 2018 amending the Act – Tax Ordinance and some other laws (Journal of Laws of 2018, item 1499) changes in: Code of Civil Procedure with 17 November 1964, Act on enforcement proceedings in administration with 17 June 1966, the law on cooperative savings and loan accounts with 5 November 2009, Act of 29 August 1997 - Bank Law, Act on National Tax Administration from 16 November 2016, Act of 9 March 2017 on the exchange of tax information with other countries, the Act of 15 December 2017 on the amendment of the Goods and Services Tax Act and of certain other laws and laws from 1 March 2018 to prevent money laundering and terrorist financing.

2 Impact assessment on the draft law 16 May 2018 amending the Act – Tax Ordinance and some other laws. [3] Ibid. [4] Ibid.