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Postponing the date of entry into force new VAT matrix

The Ministry of Finance announced that as a part of the Economic and Social Anti-Crisis Shield for the Safety of Enterprises and Employees in connection with the SARS-CoV-2 the entry into force of the new rate matrix will be postponed till 1st July 2020.

Due to the above, the classification method and VAT rates remain on the current principles.

What will change from July?

As of 1st July 2020, the rules for qualifying goods and services for specific VAT rates will change. The new system will be based on the Combined Nomenclature (CN) for goods and the Polish Qualification of Goods and Services 2015 (PKWiU) for services.

Combined Nomenclature (CN) is a structured list of goods that allows the classification of goods for international trade

What will change in terms of classification of VAT rates?

Changes aims at ensuring simplicity, transparency and user-friendliness the application of the rules by extending the entire CN sections to the greatest possible extent. This means a significant reduction of the number of items in the new annexes to the VAT Act (for example annex no. 3 [from the current 187 to 73] and annex no. 10 [from 35 to 24], which contain lists of goods and services taxed at 8% and 5% rates, respectively and as a consequence rates for particular goods and services.

Covering entire CN sections with one VAT rate results both in the reduction and the increase of VAT rate on certain goods.

The reduction of the VAT rate on:

• tropical fruits and citruses (from 8% to 5%),
• some types of bread and pastries (from 23% and 8% to 5%),
• soups, broths, homogenised and dietetic food (from 8% to 5%),
• some spices – mustard, ground pepper (from 23% to 8%),
• products for babies and children – food, teats, nappies, car seats (from 8% to 5%),
• hygiene items (sanitary napkins, hygiene tampons, diapers) – from 8% to 5%,

The increase of VAT rate on:

• lobsters and octopus and other crustaceans, molluscs and aquatic invertebrates (including crabs, crawfish, shrimps, oysters, mussels, snails) and preparations thereof, caviar and caviar substitutes, as well as meals sold in various catering establishments, ingredient are the abovementioned products – from 5% and 8% to 23%,
• some unprocessed spices (e.g. cumin, saffron, turmeric) – from 5% to 8%
• ice – used for food and refrigeration purposes – from 8% to 23%,
• specialized magazines, with the exception of regional and local printed magazines, on disks, discs etc. (for which the 5% rate is maintained) – from 5% to 8%,
• firewood – from 8% to 23%.

What to do if you are not sure what rate should be applied?

Apply for – binding rate information (WIS).

WIS is an administrative decision determining the VAT rate for the product or service that is the subject of the application. WIS will bind the tax authority to the taxpayer for whom it was issued – in relation to the good the service that is its subject.

The fee for the WIS is 40 PLN. In the case of a delivery consisting of several goods or services, the fee will be the product of PLN 40 and the number of these goods or services. If it is necessary to carry out additional tests or analyses of the goods or services that are the subject of the application, the applicant will have to cover the costs of these tests or analyses.

 

Gerard Goliasz

TAX Specialist

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