What will change?
On 12 May 2017 Polish Ministry of Development and Finance presented a draft amendment to the VAT Act which main purpose is to ensure greater stability of VAT incomes as well as preventing tax avoidance. To achieve these goals, it is decided to introduce a split payment mechanism within VAT taxation.
What is split payment?
Split payment is an instrument intended for preventing VAT fraud related issues in Poland. The idea is to split the gross amount into two separate payment streams -the net amount payable to the seller and the amount of VAT transferred to a special bank account -a VAT account.
The draft on the principle of split payment
- the mechanism will be voluntary (the buyer decides);
- split payment will concern transactions between taxpayers (B2B);
- VAT account for existing and newly opened accounts will be created and maintained free of charge by banks and Cooperative Saving and Credit Unions (Spółdzielcze Kasy Oszczędnościowo-Kredytowe-SKOK);
- the amount deposited on the VAT account can be used to pay the VAT liabilities or to pay VAT resulting from the invoices issued by contractors;
- transfer of assets from VAT account will be made on the basis of the decision of the Head of Tax office within 90 days of the taxpayer’s request.
Benefits for taxpayers
- exclusion of the provisions of joint and several liability for the goods’ suppliers tax arrears;
- exclusion of VAT sanctions [does not eliminate disputing the VAT deduction itself];
- no increased interest rate for late payment (when 95% of VAT for a given period was settled using split payment);
- repayment of VAT liability (before the statutory deadline) shall allow for decrease of VAT liability
- VAT refund in 25 days, as per taxpayer request ,if the amount will be transferred to the VAT account.
According to the Ministry’s announcement, the Amendment Act should be introduced as soon as possible to enable entrepreneurs and financial institutions to have time before 1 January 2018 to prepare for a new form of settlements.
Bildquelle: Dachkammer / pixelio.de