It is 12 April 2021. 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:
Act amending customs laws signed by the President
On 8 April 2021, the President signed the Act of 30 March 2021 amending the Act on Customs Law and certain other acts. The main customs-related changes brought about by the act aim at simplifying the process of issuing decisions on customs and tax duties, along with fuel surcharge and the emission fee due on the import of goods, by subjecting it to a single procedure. Other amendments introduced by the act relate to customs law regulations, but also to the provisions on the fuel surcharge, the emission fee, and gambling operation. At present, the customs and tax procedures relating to customs duties, VAT due, and other import fees are carried out separately and lead to issuing distinct decisions for each type of goods, covering customs duties, tax receivables, emission fee (for imported motor fuels) and fuel surcharge (for imported motor fuels and LPG). Under the amending act, the provisions of the customs law will continue to apply accordingly to the procedure to determine tax rate, fuel surcharge and emission fee. Customs duties, tax receivables and import fees, however, are to be covered by a single procedure, culminating in issuing a single decision, once all the related fees are settled.
Tax changes projected under the government's New Deal
According to the press, the new government project aimed at supporting economic recovery from the COVID-19-induced slowdown, commonly referred to as the “New Deal”, would provide for increasing the income tax threshold to PLN 30k, raising the higher rate threshold to 120k and eliminating or significantly reducing deductibility of health insurance premiums. The amendments are designed in such a way to favour individuals earning ca. PLN 30k annually. The data on the PIT settlements for 2019 shows that the largest number of taxpayers - about 1.6 million - were in the range of annual income from PLN 25k to 30k. Assuming that the income tax threshold would be increased to PLN 30k and deductibility of health insurance premiums would be completely eliminated, an individual earning PLN 30k annually, i.e. PLN 2.5k per month net, would earn clear almost PLN 1.9k more than today. Changes related to health insurance premium deductibility, would, however, prove unfavourable to individuals conducting high-income business activity, including both individuals settling their taxes under general rules and those applying the flat tax rate. At present, entrepreneurs remitting PIT are covered by the lump-sum health insurance premium regime. If the amendments come into force in their current shape, the health insurance premium rate will increase for individuals with an income higher than 75 percent of the average remuneration. The elimination of the possibility of deducting health insurance premiums in PIT will also result in the disappearance of the increase depreciation mechanism. Nevertheless, the official draft of the New Deal has not yet been announced, which means that some of the projected measures may still be modified or even eliminated from the final version.
VAT e-Commerce package passed by the Council of Ministers
On 8 April 2021, the Act amending the Value-Added Tax Act and certain other acts was passed by the Council of Ministers. The new act is intended to implement the EU provisions on the VAT e-Commerce package, the aim of which is to revamp the VAT collection system and tighten tax collection for cross-border electronic trade between companies and consumers. The act introduces the definition of 'distance sales of goods imported from third territories or third countries', provides for extending and amending the special procedure currently applied to telecommunications, broadcasting and electronically provided services (functioning until the end of 2020 under the name of Mini One-Stop Shop or MOSS) and introducing the One Stop Shop (OSS) solution, revoking VAT exemption on imported goods in consignments of an intrinsic value not exceeding EUR 22 in all the Member States, along with introducing new duties in respect of VAT collection and remittance imposed on entities who facilitate the supply of goods through the use of electronic interfaces (e.g. an e-commerce platform). The new provisions should enter into force on 1 July 2021.
Amendments to excise duty regulations
On 8 April 2021, the President signed the Act of 30 March 2021 amending the Act on Excise Duty and certain other acts. The amendments related to the excise duty regime contained therein provide for, inter alia, automation of the excise duty return and excise duty record handling process. From 1 July 2021, excise duty returns must be submitted electronically. In turn, the digitization requirement for excise duty records will take effect on 1 January 2022. Pursuant to the currently applicable provisions, excise duty records may be kept both electronically and in hard copy. Under the amending act, however, only electronic excise duty records and returns will be accepted. Furthermore, the act introduces a new type of excise duty return. Starting from 1 July 2021, taxpayers conducting business activity who use duty-exempt excise goods or zero-rate excise goods will be required to submit special excise duty returns to the head of the competent tax office.
Reporting ICS under call-off stock arrangements in the light of Brexit
On 6 April 2021, the Ministry of Finance announced via its official website that a taxpayer shipping or transporting goods transferred from the territory of the United Kingdom under call-off stock arrangements until 31 December 2020, where the right to dispose of the goods as owner has been transferred to the purchaser to whom the goods were to be supplied after 31 December 2020, is not required to declare the ICS performed under the recapitulative statement (except for goods transferred under call-off stock arrangements in the territory of Northern Ireland). Despite the fact that the ICS is not declared in the recapitulative statement, the taxpayer may subject it to the 0% VAT rate, once all the other requirements provided under the Act are satisfied.