The Ministry of Finance presented further proposals for amendments regarding VAT. These pertain to the so-called White List aiming to help taxpayers verify their contractors.
The White List is free, official, online electronic register of active VAT taxpayers. Fundamentally, the taxpayer would be able to easily check all the required information about their business partners via single platform.
The tax office requires taxpayers to exercise due diligence when identifying their counterparties in order to eliminate a risk of cooperation with unreliable contractors. Vetting business partners is indeed in the interest of the taxpayer. Ultimately, the taxpayer is burdened with negative consequences in cases of input VAT deductions from the invoices issued by a non-existent entity or a company without VAT payer status. Therefore, in order to bolster security and certainty of business transactions, the taxpayer should systematically check whether:
- business partner:
- is registered as an active VAT payer,
- has the required permits and concessions,
- Is entered into the National Tax Administration list of entities which are excluded as VAT payers by the head of the relevant tax office.
- persons signing the contract on behalf of the Company are authorised to act on behalf of its client.
Currently, the taxpayer has the option to verify its counterparties using the tools provided by the Ministry of Finance. However, business partners’ data is not aggregated in one place. Therefore, searching for all required information is inconvenient if not cumbersome. The tax authorities’ website allow the taxpayer to check whether given entity is an active VAT payer. Since last year the BIP (Public Information Bulletin) of the National Fiscal Administration, has made available the so-called Black List (czarna lista) in the form of two separate, electronic registers:
- the first list is a set of data regarding VAT payers who have not been registered or have been removed from the register of active VAT payers,
- the second one lists the entities reintroduced to the register of active VAT taxpayers.
Consequently, the taxpayer has to check three separate lists in order to satisfy the requirement of due diligence.
Reaching out to the honest taxpayers
According to the Ministry of Finance, the identification of contractors only by the NIP number (VAT number) is insufficient and scouring through data in three separate registers can be laborious. That is why a new ,organised tool with enhanced entities searching functions and extensive range of shared information is offered. The aim of the new, “upgraded” list is to improve taxpayers’ verification in order to “scan” potential contractors more accurately, and thus to safeguard the taxpayer’s interest. The list is supposed to be updated every working day. It will be available not only on the Ministry of Finance’s website, but also in the Central Register and Information in Business Activity system. The project can be found on the list of legislative works under number UA34. The launch of the White List is planned for mid-2019.
The primary advantage of the new list lies in the fact that taxpayer will be able to identify their counterparties by data other than VAT number, e.g. on the basis of partial company name. In addition, the new tool will store the following information in one place:
- in the case of natural persons:
- names and surnames,
- the business address or main business address in case when the activity is carried out on the territory of all country or in several places,
- for taxpayers who are not natural persons:
- full name,
- headquarter address,
- taxpayer’s settlement bank account numbers (Bank and Credit Unions) indicated in the VAT application or update of VAT application used for business activity,
- the date of registration, exclusion or reinstatement to the register of active VAT payers, as well as the legal basis for exclusion or reinstatement of registration as an active VAT payer.
The new tool will assist the taxpayer satisfying the due diligence requirement regarding the verification of their counterparties. Therefore, the White List can be perceived as protecting genuine taxpayers from negative consequences of unknowingly participating in the tax carousel.
White List and the negative aspects for taxpayers
As mentioned above, the aim of the tool proposed by the Ministry of Finance is to minimise risk for the honest taxpayers. The Ministry of Finance also seeks to tighten the VAT system. Consequently, the entities’ bank accounts of will be included in the new register. Upon project’s entry into force, transfers would be made only into the bank accounts indicated in the White List. In situations when the transfer is made into the account other than the one shown in the list, in the amount excessing PLN 15 000,00, the buyer can be subject to the following sanctions:
- the buyer would be jointly and severally liable for VAT obligations together with the seller,
- the buyer would be able to classify this expenditure as a tax deductible costs for PIT or CIT purposes.
There are exceptions to the above. The taxpayer can issue a bank transfer into a different bank account than the one indicated in the White List, thus avoiding the sanctions, if:
- he/she informs the tax authorities about planned transfer of money into a different account within three days from the date of transfer order,
- payment is made using the split payment mechanism.
Interestingly, it is vital the bank account was on the White List on the day of commission of the transfer rather than on the date of debiting the buyer’s account or crediting the seller’s account. It is also worth noting that entrepreneurs will not face negative consequences if the counterparty input incorrect bank account in the register.
In summary, the discussed project is an interesting solution. However, it may raise some controversies given its apparent pros and cons. By extending the entities searching options, increasing amount of available information, as well as storing the required data into single platform, the White List increases taxpayer’s chances for earlier unmasking of dishonest entities. Additional “new” information included in the list reduce the risk of challenging the right to deduct of input VAT by the tax office.
On the flipside, the new list brings new obligations and sanctions, which can be seen by some as disadvantage. To avoid sanctions, transfers have to be made solely into entities’ bank accounts published in the list. True, there are exceptions to the above rule, however in order for them to be applicable, the taxpayers have to satisfy additional formalities, which comes with incurring extra monetary and time cost. To conclude, on one side, the White List is a hand reached out to the honest taxpayers. Yet, due to increased formalities, many taxpayers may consider it as a hurdle.
Paulina Bartoszuk Kicińska