As part of the proposed changes related to the publication by the Ministry of Finance of the day 26 July 2021 draft law, "Polish Deal” it is envisaged to introduce a faster VAT refund institution for ‘cashless taxpayers’.
The planned arrangements provide that, in compliance with the relevant conditions, the taxable person will be entitled to a refund of the excess input tax due during the period 15 the days from the date of the declaration.
Unfortunately, imposing multiple complex conditions on the mechanism may result in a significant reduction in its use
Requirements to benefit from faster VAT reimbursement
The basic requirements to be met for the accelerated VAT refund will be the following criteria (in the last period). three months:
- identification at least 80% sales by means of a register office that allows the connection and transmission of data between the register and the Central Repository of Kas (CRK) – online and virtual cash registers;
- identification at least 80% (to the end 2023 – not less than 65%) sales using cash registers using payment instruments, including credit transfer services.
Introduction of a transitional solution for the application of the lower non-cash turnover threshold to taxpayers at the level of 65% to 2 years since the entry into force of the abovementioned provisions are intended to take account of the pace of development of non-cash payments in Poland.
In addition, in order to receive an accelerated VAT refund, additional conditions must be met:
- by previous 12 the total value recorded using the sales counters, including the tax, shall not be less than 50,000 PLN for each settlement period;
- the amount of VAT refund shall not exceed twice the tax resulting from the sales recorded using the cash registers in the relevant accounting period;
- the amount of the excess input tax due, not settled in previous settlement periods and shown in the current declaration, cannot exceed 3,000 PLN;
- taxpayer, by previous 12 for months, it will have to be registered as an active VAT payer, to submit declarations and to keep records of sales using only the register offices enabling the connection and transmission of data to the CRK;
- taxable person by 3 The months preceding the application for an accelerated VAT refund will have to have an account disclosed to the so-called ‘exempt’ "white list".
Importantly, to verify the conditions for VAT reimbursement within the time limit 15-on a day-to-day basis, no additional data will be required from taxpayers, including confirmation of compliance with the threshold for non-cash payments in turnover recorded using online registers, including virtual ones.
The changes are to be based on the assumption that the existing analytical tools available to the Head of National Tax Administration (e.g. JPK VAT files, Central Tax Data Register resources, CRK resources) should provide the authorities with the possibility to verify the reasonableness of VAT reimbursement in a faster time than 15 days.
Penalties in VAT for not ensuring that non-cash payments can be made
In addition, in connection with the law of entrepreneurs planned in the Act (designed Article 19a) the need for entrepreneurs to be able to accept non-cash payments using a payment instrument, in the provisions of the VAT Act, the Ministry of Finance has decided to introduce solutions aimed at temporarily reducing certain VAT preferences to taxable persons who, contrary to the obligation, do not ensure readiness to accept non-cash payments.
Consequently, the taxable person with whom it was identified that, contrary to the obligation, he did not provide for payment by means of a payment instrument at any place where the economic activity is actually carried out:
- temporary exclusion of the possibility to apply quarterly accounts,
- temporary exclusion of the right to reimbursement of VAT within the time limit 25-day.
Moreover, excluding the possibility to apply for a refund of VAT at an accelerated time 25-the day-to-day reimbursement of VAT by taxable persons who were found not to have fulfilled that obligation during the period in question within the time limit 25-in such cases, it will not be eligible for both the settlement period in which it was identified and for 6 subsequent settlement periods.
Similarly, the return to quarterly settlement will also be possible no sooner than after the expiry of the 6 the months following the last month of the quarter in which the irregularity was identified.
It should be stressed that the MF has also excluded from the above preferences the smallest entities with a turnover below 50,000 PLN A month. It is therefore difficult to agree with the ministry's argument that "a solution should generally be available to taxable persons carrying out retail sales".
As the ministry points out, in the procedural context, the head of the tax office will be able to extend 15-the day-to-day time limit for the refund of VAT, pending the completion of the verification of the taxable person’s accounts. In this respect, taking into account the practice of tax authorities, there is a strong likelihood that accelerated VAT reimbursements could be delayed, for example, by means of fiscal checks/checks.
In addition, in cases where the verification of the settlement (as regards the conditions for shortening the repayment deadline from 60 to 15 days) will end with a negative result, further verification of the validity of the VAT refund shown in the taxable person's accounts will be carried out within the ‘basic’ period i.e. 60 days.
In summary, the fastest in Europe, 15-The day-to-day VAT refund period should give rise to considerable interest by taxpayers. Unfortunately, the imposition of multiple complex conditions on the mechanism may result in a significant reduction in its use.
In this context, it also seems necessary to draw attention to the risks of, for example, continuously increasing the knowledge of the body over the activities of the taxpayer, and this entails deepening supervision or introducing new sanctions already mentioned above.
It should be assumed that the activities of the ministry are aimed at eliminating the grey area whose presence in Poland is estimated at 20% GDP. However, it is not difficult to notice that this will be done on a stick and carrot basis.[1]
[1] Based on:
Draft amending law – so-called "Polish Deal”: https://legislacja.rcl.gov.pl/docs//2/12349409/12805432/12805433/dokument514512.pdf
Tax explanations for the amending Act: https://legislacja.rcl.gov.pl/docs//2/12349409/12805432/12805433/dokument514955.pdf
https://www.money.pl/pieniadze/calkowita-eliminacja-gotowki-to-tylko-kwestia-czasu-6663979768474368a.html
https://www.pit.pl/aktualnosci/mf-zwrot-vat-w-15-dni-i-ulgi-w-ramach-programu-podatnik-bezgotowkowy-od-2022-r-1005625
About the author: Mateusz Krawczyński
Junior tax consultant in Russell Bedford Poland. Graduated from bachelor's degree in Logistics and Master's degree in Finance and Accounting. Previous professional experience in one of the so-called Big Four companies. He specializes in tax on goods and services, in particular with regard to VAT settlements in local government units.