On 27 January 2022, the Act amending the Value-Added Tax Act (commonly referred to as the Anti-Inflation Shield 2.0) was published in the Polish Journal of Laws. The Act provides for a temporary reduction of VAT rates on certain categories of goods, beginning 1 February 2022 through 31 July 2022, aimed at lowering retail prices to reduce the impact of surging inflation. The new regulations are to enter into force on 1 February 2022.
What will change?
The decree of the Minister of Finance dated 17 December 2021, amending the decree on goods and services subject to reduced VAT rates and the conditions for applying the reduced rates from 1 January 2022 to 3 March 2022, cut VAT on:
- supplies, intra-community acquisition, and imports of natural gas (from 23 percent to 8 percent); and
- supplies, intra-community acquisition, and imports of electricity (from 23 percent to 5 percent).
Under the new Act, the reduced 5 percent VAT on electricity is to apply until 31 July 2022, while the 0 percent VAT on natural gas is to apply from 1 January 2022 to 31 July 2022.
Furthermore, it brings reduced VAT rates, inter alia, on:
- food products listed in items 1-18 of Appendix 10 to the VAT Act (such as fish and fish products, dairy products, vegetables, fruit, including fruit and vegetable products, cereals, products of the milling industry, cereal and bakery products and some beverages) – from 5 percent to 0 percent;
- fertilizers, pesticides, potting soil, and other measures supporting agricultural productions – from 8 percent to 0 percent;
- diesel fuel and motor fuels – from 23 percent to 8 percent, effective from 1 January 2022 to 31 July 2022.
What will change?
The key feature of e-Invoices is that they can be issued and sent directly from taxpayers' financial and accounting programs in a structured digital form, using the ICT system operated by the Ministry of Finance, i.e., the National e-Invoicing System (PL: Krajowy System e-Faktur, KSeF). Structured invoices are issued based on a uniform logical structure, FA_VAT, provided by the Ministry of Finance. The solution prepared by the Ministry allows for creating invoices directly in taxpayers' financial and accounting programs and transmitting them to the National e-Invoicing System via application programming interface (API). Consequently, to apply this solution, the taxpayer needs to have their system integrated with the National Invoicing System.
Once the invoice is sent, the National e-Invoicing System checks its compliance with the e-Invoice logical structure and, after positive verification, assigns it an identification number. The date of issuing a positively verified structured invoice is the date the issuer transferred it to the System. The date of assigning a KSeF identification number is also considered as the date of invoice reception by the recipient.
Providing structured invoices using KSeF requires the invoice recipient's approval. Should, however, the recipient refuse to accept e-Invoices, this does not mean that the taxpayer cannot issue a structured invoice.
Nevertheless, in such cases it is necessary to agree on a different form of exchanging invoices between the parties.
The solution relies on a system of authorization, meaning that issuing a structured invoice must be authorized by a competent person through the system. Transmitting invoices to the KSeF system will be possible upon the authentication of the taxpayer with the use of a qualified electronic signature, an electronic seal, trusted profile, or an authorization token generated via KSeF and assigned to an authorized taxpayer or entity.
Any taxpayer-authorized entity or individual may issue and access structured invoices in the KSeF system. This means that it is possible to authorize e.g., an accounting office or specific employees to issue and receive structured invoices on behalf of the taxpayer.
Who will be affected?
The changes impact both VAT payers and consumers.
How will it affect business operations?
The introduction of the Act means that prices must be accordingly adjusted and marked in stores and accounting systems.
Importantly, the Act also imposed an obligation to visibly display information on the reduced VAT rates at the cash register on the premises where food products, motor fuels and goods used for agricultural production covered by the reduction are sold.
Moreover, the new provisions impose on the suppliers of natural gas, electricity, and heat energy the obligation to inform the recipients on the temporary VAT reductions:
- through invoices or other documents based on which the payment is claimed; or
- in a separate communication, if the invoice or other document based on which the payment is claimed will be sent later than within 2 months from the date of entry into force of the Act.
Amendments to VAT regulations also mean that on 1 February 2022, Binding Rate Information issued for goods to which the reduced rates brought by the Anti-Inflation Shield 2.0 apply are to expire.
Importantly, VAT reductions covered by the Anti-Inflation Shield 2.0 do not affect the classification of goods being subject of the Binding Rate Information issued according to the Combined Nomenclature (CN), since it will not change in any way.
How can we assist you?
The vast array of services provided by KPMG includes:
- verifying VAT rate calculations;
- analysing any possible doubts related to the matter and suggesting the best approach in individual cases.