In today's episode:
- Draft bill on VAT e-commerce package passed by the Sejm
- Entry into force of the new WHT collection rules further delayed
- European Commission proposes a plan for a more unified business taxation in EU
- Draft bill amending excise duty regulations
- Changes to the bad-debt relief in VAT announced by the Ministry of Finance
- Launch of the Excise Duty Forum
Draft bill on VAT e-commerce package passed by the Sejm
On 21 May 2021, the Lower House of the Polish Parliament passed a bill amending the Act on VAT and certain other acts, which implements into the Polish legal system 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. EU regulations require the amendments to be implemented in individual countries by 1 July 2021. At the Sejm, sitting Jan Sarnowski, Deputy Minister of Finance, assured that appropriate changes would be introduced in Poland in a timely manner. Other measures brought about by the bill include a relief for adapting vehicles to the e-TOLL system, clarification of doubts regarding reliefs on charitable donations made to support hospitals and other facilities combating the COVID-19 pandemic, as well as extension, by the end of the year, of the possibility for local governments to grant companies reliefs in the payment of local taxes and fees. The bill now moves to the Upper House of the Polish Parliament.
Entry into force of the new WHT collection rules further delayed
In response to a press inquiry, the Ministry of Finance’s press office announced that the Ministry plans to issue subsequent decrees further postponing the entry into force of the amended WHT collection rules, most probably until the end of 2021. Initially the new rules were to become effective on 1 January 2019, under the amended tax acts of 23 October 2018. Pursuant to the new WHT collection rules, a Polish taxable person paying interest, dividends, license fees or remuneration for certain intangible services to foreign taxpayers will be required to collect the withholding tax, and only then the foreign taxpayer or remitter will be authorized to apply for a WHT refund. Entry into force of the new provisions was suspended because of the Ministry’s works on the amended PIT and CIT Acts, which are to bring new, alleviated requirements for WHT collection and are still underway. The Ministry of Finance announced that the legislative work is coming to an end and the relevant draft will be adopted by the end of 2021.
European Commission proposes a plan for a more unified business taxation in EU
On 18 May 2021, the European Commission unveiled its communication on the actions aimed at establishing more unified rules of taxing companies in the European Union. The primary goal of the reform is to support Europe's recovery from the COVID-19 pandemic, but also to incorporate the tax reform plans elaborated by G20 and OECD. According to the communication, the new EU corporate tax framework is to be unveiled by 2023. Details of the provisions on counteracting abusive use of shell companies for aggressive tax planning will be presented already in 2021. Moreover, the Commission committed to make a legislative proposal to address the issue of debt-equity bias in the current corporate taxation, by the fourth quarter of 2021. A proposal introducing the requirement of annual publication of the effective corporate tax rate by certain large companies operating within the EU, based on the methodology currently elaborated by OECD, addressing global tax challenges raised by digitalization and enabling countries to tax income which is non-taxed or under-taxed in other countries, is to be presented in 2022.
Draft bill amending excise duty regulations
On 17 May 2021, draft bill amending excise duty regulations, providing, inter alia, for implementation of the provisions of the EU Alcohol and Horizontal Excise Directives, with the time-limit for transposition falling on 30 June 2022, was added to the list of legislative work and policies of the Council of Ministers. The amendments brought about by the bill relate to computerization of the movement of excise goods which are released for consumption in the territory of a Member State under the EMCS system, harmonization of excise and customs procedures, in the context of implementation of the Union Customs Code, and inclusion of regulations to ensure consistency between the electronic administrative document (e-AD) and the customs declaration for export and at importation. There are also planned changes to the regulation regarding the obligation to present to the competent authorities by a person accompanying excise goods a unique Administrative Reference Code (ARC). Under the amended provisions, the code can be presented in any form, not only on the e-AD form. Other amendments relate to the provisions on losses of the excise goods during their transport in the territory of a Member State under a duty suspension arrangement.
Changes to the bad-debt relief in VAT announced by the Ministry of Finance
Draft legislation guidelines for the SLIM VAT 2 package set out a raft of amendments to the bad-debt relief in VAT. The amendments find their source in the CJEU’s ruling of 15 October 2020 (case file C-335/19), where it was stated that some of the Polish bad-debt provisions are incompatible with the EU law. The Ministry’s proposal is to waive the requirement for the debtor to remain an active VAT payer and not to carry out restructuring or bankruptcy proceedings. Importantly, the Ministry does not plan to abandon the requirement for the creditor to be registered as a VAT payer, although a similar regulation has already been challenged by the CJEU. Moreover, it does not foresee any amendments as regards the condition that the debt cannot be settled or sold in any form. Furthermore, the proposed amendments also extend the time for the creditor to take advantage of the relief from two to three years from the end of the year in which the invoice documenting the unpaid debt was issued.
Launch of the Excise Duty Forum
On 19 May 2021, the decree of the Minister of Finance on instituting the Excise Duty Forum came into force. The Excise Duty Forum is a team of experts supporting the Minister in solving problems related to the Polish excise duty system. Its responsibilities include elaboration of analyses, opinions, and proposals for improvement. The first meeting of the Forum is scheduled for the second half of June, when it will tackle the issues related to the tobacco product, e-cigarettes, and novel tobacco product market. The Excise Duty Forum is the third body of this kind supporting the Minister of Finance. In 2018, a Transfer Pricing Forum was instituted, while in 2019 the MDR Forum was launched.