I. Changes in income tax for individuals not conducting business activity: Raising to PLN 30,000 the annual amount of income tax-free from personal income tax for…
In 2018 we informed about plans for the introduction of the new SAF-T VAT structure, which will replace the VAT-7/VAT-7K returns and eliminate the necessity of submission of VAT-27 return. The idea met with popular enthusiasm of the taxpayers. Each of us was hoping that such a solution would significantly reduce the amount of work and effort necessary to prepare PL VAT settlement. However, after the analysis of the draft Regulation of Ministry of Finance of 29th July, 2019, which regulates in detail the formal requirements of the new SAF-T VAT structure, it seems that for the majority of taxpayers the effect will be completely opposite.
Additional information subject to VAT reporting
The draft law shows that the new structure will include even more additional information than it was proposed as part of the public consultation on the new VAT scheme in January 2019. Additional fields in the opinion of the Ministry of Finance are aimed at increasing the precision of analyzes carried out by the tax authorities.
The Minister of Finance assigned individual codes for selected groups of goods and services that are considered to be particularly exposed to VAT fraud. In result, taxpayers selling such goods or services will be required to complete additional fields in SAF-T VAT, using the codes assigned by the Ministry of Finance in the Regulation. This will concern, among others, supply of vehicles and car parts, medicines, some electronic devices and many services, i.e. intangible services.
In addition, new reporting requirements will also apply to:
- distance sales from the territory of the country - the code "SW";
- indication of the existence of a relation between the parties of the transaction (i.e. capital, property, personal) - the code "TP";
- deliveries of goods made as a part of chain transactions – the "TL" code;
- transactions based on the split payment mechanism - the "MPP" code;
- acquisitions and supplies as a part of simplified triangulation transactions - code "TT_WNT" and "TT_D";
- ICS following import of goods in procedure 42 or 63 - code "I_42" or "I_63";
- ICA and ICS in the call-of-stock procedure - code "CS_WNT" and "CS_WDT";
- deliveries and services related to single-purpose vouchers – i.e. "B_SPV" code.
The Regulation does not specify how the taxpayers will have to report the transactions that may be qualified under more than one code, i.e. delivery of sensitive goods to a related party.
In addition, taxpayers will be required to indicate the type of the document that will be the basis for reporting the transactions in VAT ledgers. This catalog is closed and has been defined separately for sales and purchase transactions using individual codes. Moreover, this will concern only the types of documents that are related to the application of certain tax simplifications or special procedures, i.e. split payment method, cash settlement method, simplified import of goods, simplified invoice and invoices issued on demand.
Implications for taxpayers
Taxpayers expecting simplifications resulting from the replacement of VAT returns by the new SAF-T VAT structure may feel disappointed. In practice, it may turn out that for most taxpayers the preparation of the new SAF-T VAT structure may involve more time and effort than they current spend to prepare both SAF-T file and VAT-7/7K return. The simplification in VAT reporting may apply only to the taxpayers performing basic sales and purchases transactions of goods and services that are not classified to high-risk groups from VAT fraud perspective. The other taxpayers will be forced to verify with better care all the transactions in which they participate, documents received and correctness of their records. Any mistake, according to new regulations, may cost the taxpayer PLN 500.
It is worth paying special attention to the obligation of indication the transactions for which there is a family, capital, property or employment relationship between the parties of the transaction (i.e. between counterparties or persons discharging managerial, supervisory or control functions). In result the taxpayers should also analyze in detail the possible relations with their contractors. Although in the case of transactions carried out based on permanent cooperation this may not be a major problem, however, for a large number of transactions with various entities, the obligation to verify the existence of relations may cause significant increase in time and work. Taxpayers operating in such a scheme should now consider the implementation of possible solutions that could accelerate the analysis of reporting obligations in this regard.
The introduction of additional reporting obligations will require adaptation of accounting and financial systems to the new reality and overview of some internal procedures that will improve the processes related to the identification of the required transactions. Contrary to the expectations, it seems that additional obligations will be imposed on employees of accounting departments, which will also have a negative impact on the costs of preparation of the new SAF-T VAT file.