Unifications

The new rules, which entered into force on 1 April 2019 (a rather unfortunate date), are intended to harmonise the VAT rates of all products classified as one group. Even more changes await entrepreneurs and consumers in the next year, when the next tax rate unification is planned. At present, the main focus is on the food industry, including the processing industry. The project assumes the adoption of a single tax rate for products classified under one heading. There will therefore be no different rates for domestic and imported fruit, for example.

The VAT matrix is also to be proven effective in the baking industry. Until recently, bread rates were differentiated according to the shelf life. Differential tax rates were also applied to ready-made spices – ketchup and ready-made sauces were subject to a lower rate than the mustard popular on Polish tables. There are more examples, as the employees of processing plants and restaurants know. These two seem to show the problem clearly.

Changes in taxes

The draft of the Ministry of Finance envisages not only greater transparency in the level of rates, but also a lower fiscal burden in subsequent years. At current rates, the fiscal burden will be reduced by one percentage point next year (e.g. from 23% to 22% and from 8% to 7%). Importantly, in the event of a necessary change of rate per product group, the legislator is to apply the principle of a downward equation. For another product group, such as dairy products, eggs, nuts, meat and offal or fruit, a single rate of 5% is to apply.

While popular and widely available products should become more popular, luxury goods will become even more expensive due to changes in VAT. The increase in the tax will cover, among other things, the infamous octopus, lobsters, caviar, crabs and other crustaceans and aquatic invertebrates, as well as the preservatives and prepared dishes containing them. Another group of products whose price increases will be noticeable is fruit and vegetable juices other than 100%. The change in the rate is intended, firstly, to influence consumer decisions (the opposite of carbonated drinks and so-called nectars) and to harmonise the rate of cold drinks, apart from juices, with the tax levied on coffee or tea.

Increased transparency

A clearer system and fewer tax rates are to make things easier for entrepreneurs. The annexes to the Act are to contain fewer items than before.

Although the VAT matrix for food products is the most emotional, the changes in rates combined with their harmonisation will also cover other articles, including electronics, hygiene products, the press, books and toys. The height of others, as for firewood, is not to be changed. It is difficult to judge today how the changes will affect the functioning of entrepreneurs and the amount of budget revenue.

Artykuł VAT matrix pochodzi z serwisu Biuro rachunkowe CREDOS.

Increased threshold

The tax law in force since 1 January 2019 determines, among other things, the value limit of a passenger car, to which the entrepreneur may apply full deduction of the depreciation charge. Interestingly, in the case of electric cars, the amount was increased to PLN 225,000 (from PLN 150,000 for conventional cars). The increase can be explained both by the increase in the price of new vehicles and also by the increased traffic in car dealerships and thus by increased budget revenues from other taxes.

Similar amounts for passenger cars are valid for leasing or contracts of a similar nature. Also at PLN 150,000 for combustion vehicles and PLN 225,000 for electric cars, the legislator has set the maximum amount adopted for the purpose of insurance calculation, the amount of which may be recognised as deductible costs in the company.

Private car in the company

If the entrepreneur wants to use the car for both private and business purposes, he will be obliged to choose the option of 50% VAT deduction. Importantly, according to the new proposal, taxpayers who use a private car in a company will not be required to drive a mileage and are therefore not obliged to include it in their annual tax returns. In the case of “mixed use” there is also no need to register the car with the tax office. Settlement of VAT rates also depends on additional technical tests and technical parameters of the car.

Sale of a car

As the sale of a vehicle used in a company is linked to revenue, in the case of incomplete depreciation, the remainder of the write-down must be fully charged to costs. The sale of a car without VAT is only possible if there was no right to deduct this tax when buying it. Active VAT payers will probably not be able to take advantage of the relief, so sales will be taxed at 23%.

Car withdrawal from the company

It happens that companies withdraw a passenger car, which is then used privately. It is permitted, but if the vehicle is not fully depreciated, the undepreciated part cannot be included in the tax deductible costs. Importantly, if VAT was deducted (in whole or in part) during the sale, then, according to the letter of the law, withdrawals for own use must also be taxed.

The amount of VAT rates for car use in a company still depends on many factors. The new rules are intended to make life easier for entrepreneurs. You will be able to find out how the changes have affected your daily business in the coming years. Unless further modifications are made.

Artykuł New way of accounting for company cars pochodzi z serwisu Biuro rachunkowe CREDOS.

Complexity

A recent analysis of the impact of VAT shows that the increase in revenue is linked both to a tightening of the system and to an increase in the economic situation in the country. Poland, as an important piece of the global puzzle, benefits from global prosperity, just as it suffered during the recession of the early 21st century. Increasing VAT receipts also means increasing consumption, sometimes combined with excessive borrowing. Poles are increasingly bold in taking out not only housing loans, but also consumer loans, meeting their desires and real needs. Furthermore, the increase in VAT is linked to the influx of labour from abroad. Even if workers from Ukraine or Belarus are exempt from part of the fiscal burden and send part of their earnings abroad, they have to pay for food, fuel or housing while living in Poland, while also contributing VAT to the Polish budget.

Estimates for 2019

According to government estimates, tax receipts in 2019 are expected to be nearly PLN 20 billion higher than in 2018, of which nearly PLN 13 billion is due to VAT. This is due to increasing consumption, but at a slower rate than in 2018, and the seals of the tax system. However, many experts warn against over-optimistic forecasts, predicting that income growth may weaken in the coming years, because the possibility of increasing tax collection is slowly running out, even with an improved system. In addition, an increase in public expenditure is anticipated, combined with the co-financing of public investment expenditure, part of which will come from the EU budget. Additional expenditure will therefore have a negative impact on public finances.

Delay discrepancies

An analysis of the impact of VAT on the budget after a change in government fiscal policy shows that there are still clear discrepancies between economic growth and VAT receipts. While in 2017, when a record amount of VAT money was collected, the dynamics will decrease in the following year and years. The discrepancies in quotas and plans can also be seen when you analyse the information about the increase in revenue depending on the source. While the media criticising the ruling team mention growth of just over 1%, the Central Statistical Office claims that the national economy has been enriched by over 5% in VAT. The differences may result, among other things, from the accumulation of money by the budget, which is then given back to the entrepreneurs in the next settlement period in almost wholesale quantities.

The analysis of the impact of VAT has never been so unobvious. It seems that experts’ opinions are divided not only because of the research methods chosen, but also because of political sympathies.

Artykuł Analysis of the impact of VAT pochodzi z serwisu Biuro rachunkowe CREDOS.

Since when does the Standard Audit File apply and who is it valid for?

The SAF has been in force since January 2018, and is mandatory for all entrepreneurs who are active VAT payers (the beginning of the SAF is 2016, when the document was introduced for large business entities). While, for legislators, the new tool is primarily intended to increase revenue while, at the same time, allowing for better budget planning, it is also intended to provide a number of benefits for entrepreneurs. Above all, the Standard Audit File is intended to speed up the correct confirmation of settlements between the taxpayer and the office, in order to reduce business costs. In most cases, when there is no suspicion of unfair practices against the trader, no additional tax inspection will be necessary. In addition, for companies, SAF is to be a useful tool for monitoring finances, as part of the internal control.

What does the Standard Audit File consist of?

Available in the popular xml format, the Standard Audit File contains seven structures. Each of them has been assigned to a specific activity, so not all of them will be valid in a given company. The common elements of each structure are: a header enabling the identification of the company, a substantive section informing about financial flows and other economic activities and a control section allowing to verify the correctness of the information contained.

The Standard Audit File consists of the following parts: JPK_KR (accounting books) JPK_WB (bank statement), JPK_MAG (warehouse), JPK_VAT (VAT purchase and sales records), JPK_VA (VAT invoices), JPK_PKPIR (tax revenue and expense ledger) and JPK_EWP (revenue record).

Each file will contain, among other things, the identification number of the contractor, contact details of the contractor, the number of the proof of sale or purchase, the date of issue and the date of sale (purchase), if different from the proof of sale (purchase). For the smallest companies, the most important document is JPK-VAT, which is a record in a given month.

Exceptions and doubts

The Standard Audit File is not mandatory for all companies. The electronic document JPK_VAT does not have to be submitted, inter alia, by companies whose total sales in the previous year did not exceed PLN 200 thousand and companies selling services and goods which are exempt from VAT.

The confirmation of the correct sending of the SAF is the Official Receipt Confirmation of Acceptance (UPO), which can be submitted independently using a Trusted Profile or a secure electronic signature. If doubts arise after the submission of the document, there is an obligation to correct JPK_VAT.

Artykuł Standard Audit File pochodzi z serwisu Biuro rachunkowe CREDOS.

The mechanism

Split payment is based on payments for goods and services, which are divided into two parts. The first is the net amount and the second is the fiscal burden, namely VAT. The payment is automatically divided by the bank, which would make things easier for entrepreneurs. The net amount goes to the supplier’s (principal’s) company account, while the rest goes to a special bank account, controlled by the Tax Office. Importantly, an additional bank account is created automatically.

Reverse charge

The split payment mechanism is based on the reverse charge, which is a payment system that has been operating for years in the construction industry, among other things. The system passes the test when a general contractor subcontracts a service to a subcontractor with an individual contract with a strategic investor. According to the reverse charge principle, the subcontractor is obliged to issue a VAT invoice with the reverse charge, i.e. in the analysed situation the entity responsible for the settlement with the tax office is the general investor or the contractor. It is possible because a subcontractor invoices a net amount for his services, i.e. he will not have to apply to the tax authorities for a refund of the previously collected tax for the construction materials purchased.

Additional risk burden

While for small businesses, reverse charges are a convenient mechanism and sometimes the only way to maintain liquidity, for larger players it is risky. Voluntary split payment, as practice shows, operates with a delay and often the clients wait a long time for their due tax refunds. But still, voluntary split payment (this may change in 2019 and the mechanism will be mandatory for some industries) to honest entrepreneurs for guaranteeing many non-material benefits as well.

It is a paradox that the benefits to honest businesses of split payments may be less than those achieved by defaulting entrepreneurs. It turns out that companies that are in arrears with their civil law liabilities do not need to fear that money will be withdrawn from the debtor’s account. As it follows from the regulations, the account of the Act may be debited “solely for the purpose of execution of the seizure on the basis of an administrative writ of execution relating to the enforcement of claims under the value added tax”.

There will be improvements

The split payment, which has been in operation since July 2018, requires both clarification and careful observation of how the new regulations will affect entrepreneurs. When, thanks to the split payment mechanism, priority is given to the payment of liabilities of any kind, the question arises as to whether it should be possible to pay possible debts from VAT bills, including those of the Social Security Institution (ZUS) or PIT?

Artykuł What is split payment? pochodzi z serwisu Biuro rachunkowe CREDOS.