It is 7 February 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
In today's episode:
- Pre-consultation on SLIM VAT 3
- Certain reporting deadlines to get extended
- Draft bill on deposit-refund system
- Anti-avoidance clause is not retroactive
- Using correct PIT return forms for successful settlements
- Refusal to repay a loan due to statute of limitations does not bring revenue subject to PIT
Pre-consultation on SLIM VAT 3
The Ministry of Finance announced that another suite of amendments to VAT, dubbed SLIM VAT 3, had been put out to pre-consultation. The amendments were grouped into 7 categories, namely: improving companies’ liquidity, VAT in international trade – cutting red tape; wider range of VAT exemptions; less corrections and payer-friendly VAT settlements; simplified invoicing and less obligations; reduced VAT enforcement measures; consolidation and unification of Binding Information. Notably, the proposed simplifications include extending the scope of certain VAT exemptions, consolidating, and unifying Binding Information, and introducing new rules of exchange rate conversion for correcting invoices..
Certain reporting deadlines to get extended
The Ministry of Finance announced that it intends to extend deadlines for submitting financial statements and CIT-8 returns for 2021. The deadlines for making, approving and submitting financial statements falling in 2022 will be extended by 3 months for private sector entities (excluding those operating on the financial market and supervised by the Polish Financial Supervision Authority) and non-governmental organizations, for 1 month for public finance sector entities, and by 3 months for personal income tax payers who keep books of accounts (as regards submitting financial statements to the Head of the National Revenue Administration). Pursuant to the notice issued by the Ministry, the deadline for submitting CIT-8 returns for 2021 is to get extended by 3 months (until 30 June 2022). The deadline for paying the tax due, if applicable, will also be extended.
Draft bill on deposit-refund system
Amendments to the Act on packaging and packaging waste management and to the Act on waste, aimed at introducing a deposit-refund system into the Polish waste management regulatory framework, has been put out to public consultation. The system would apply to single-use plastic beverage containers, up to 3 litres and reusable glass bottles up to 1.5 litre. Introduction of the system will bring changes to VAT and income tax schemes, including a raft of changes to VAT compliance measures and settlements. The new Act is expected to enter into force on 1 January 2023. Companies will have a maximum of two years to put in place an effective system or systems.
Anti-avoidance clause is not retroactive
In its ruling of 26 January 2022 (case file II FSK 1172/19), the Supreme Administrative Court held that Article 199a of the Polish Tax Code cannot be treated as a tax avoidance clause, while the anti-avoidance clause introduced in 2016 cannot be applied retroactively. The case at hand related to a company engaged in activities that were assessed by the tax authority as pursued for the sole purpose of achieving tax advantage, pursuant to Article 199a(1) of the Polish Tax Code. The SAC confirmed that disregarding the legal consequences of the actions performed would be possible in the former legal order, under Article 24b(1) of the Tax Code. The anti-avoidance clause provided by Article 119a of the Tax Code became effective on 15 July 2016 and applies to tax advantages obtained from the moment of its entry into force, while the company engaged in the analysed activities in 2015 and Article 199a of the Tax Code does not allow for the negation of the transaction, even if it was carried out to obtain tax benefits within the meaning of Article 119a et seq thereof.
Using correct PIT return forms for successful settlements
Many taxpayers wonder which tax return form they should use to ensure correctness of their tax settlements. The selection is broad, and the choice depends on the taxation scheme applied. Undoubtedly, PIT-37 is one of the most popular tax forms for making annual settlements, used by taxpayers earning income under employment relationship, specific task contracts, contracts of mandate, but also by pensioners. Instead, PIT-28 is a declaration on the amount of income obtained by the taxpayer, the amount of deductions made and the lump-sum tax due on recorded income. PIT-36 is primarily intended for individuals conducting business activity under general principles of taxation or in special branches of agricultural production. Finally, PIT36L relates to entrepreneurs taxed with 19% flat tax. One should also keep in mind that PIT-38 is used to declare income from the sale of securities, derivative financial instruments, taking up shares in companies, etc., while PIT-39 relates to income, inter alia, from the sale of real estate.
Refusal to repay a loan due to statute of limitations does not bring revenue subject to PIT
According to the ruling of the Supreme Administrative court dated 2 February 2022 (case file II FSK 1256/19), given that civil-law liabilities, contrarily to tax liabilities, do not expire as a result of limitation, it cannot be argued that the limitation itself gives the debtor a measurable benefit. Tax law may not disregard the civil law situation of the debtor and therefore it should be concluded that due to the statute of limitations on the creditor's claim, there is no permanent asset gain for the debtor and no taxable income. Under the statute of limitations, the debtor does not obtain any real and definitive material profit, which should be assessed in relation to the characteristics of taxable income. Revenue for tax purposes means only a property contribution that is permanent and definitive.