KPMG Weekly Tax Review 15 MAY - 22 MAY 2023

On 17 May 2023, the European Commission put forward proposals for a comprehensive reform of the EU Customs Union, to respond to the increase of the volumes in trade (especially in e-commerce), the growing number of EU standards that must be checked at the border, and geopolitical realities and crises. The three pillars of the EU Customs Reform are: new partnership with business, smarter approach to customs checks, and more modern approach to e-commerce. Businesses bringing goods into the European Union will be provided with a new EU Customs Data Hub, where they can report all the information on their products and supply chains. Moreover, all Member States will have access to real-time data to respond to risks in a more efficient way. Importantly, a new body - EU Customs Authority - will be introduced. 

On 16 May 2023, Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (CBAM), i.e., EU carbon border tax, was published in the Official Journal of the EU. The legislation seeks to gradually (starting in 2026) impose fees at the border for differences in CO2 emission tariffs in non-EU countries. The CBAM will initially apply to imports of selected goods belonging to the following categories: cement, electricity, iron and steel, and aluminium. Importers of such goods will be required to obtain the status of an authorized declarant under a separate procedure, purchase CBAM certificates, and submit annual CBAM declarations. The CBAM will enter into force as of 1 October 2023.

On 17 May 2023, the bill amending the Value-Added Tax Act and certain other acts, introducing mandatory use of the National e-Invoicing System (KSeF) from 01 July 2024, was put before the Sejm. The bill brings a uniform e-invoice standard to, inter alia:

• simplify the transaction documentation process,
• accelerate and automate document issuing, processing, and archiving,
• enable more efficient document processing,
• provide taxpayers with access to up-to-date information from invoices for management purposes, including analytics, but also for the purposes of other business areas.

Importantly, the bill provides for all-online handling of Binding Tariff Information (BTI), Binding Origin Information (BOI), Binding Excise Information (BEI), and Binding Rate Information (BRI) through extension and adjustment of the already operating systems of the National Revenue Administration. The bill has already been submitted before the Lower House of the Polish Parliament for first reading.

In its judgment dated 17 May 2023 (case file C-105/22), the Court of Justice of the European Union ruled that Polish provisions precluding the reimbursement of excise duty on passenger cars exported from Poland (but previously registered in the national territory) cannot be regarded as being contrary EU provisions, including the principle of proportionality and the principle that excise duty is a single-stage tax. The CJEU noted that the Polish excise duty in respect of passenger cars does not take on the characteristics of a tax linked to the duration of the use of such vehicles, but rather that of a tax on consumption of those vehicles, which is implemented via the registration of the passenger car concerned in national territory. This, in turn, means that the Polish system of taxation of passenger cars does not obstruct fee movement of goods and Poland is not required to reimburse excise duty once a vehicle temporarily registered in Poland is exported to a different country.

In its judgment dated 12 May 2023 (case file II FSK 1295/20), the Supreme Administrative Court ruled in the case of a company, which purchased property, gross profit, and commercial terrorism insurance services from taxpayers without a registered office or place of management in Poland. The performances, however, did not cover insurance guarantees. Consequently, the company inquired whether such services should be covered by lump-sum income tax under Article 21 of the CIT Act.

According to the Court, insurance services are not similar to guarantee services and, consequently, shall not be subject to lump-sum income tax under Article 21(1)(2a) of the CIT Act. This is because the notion of insurance is strictly linked to the fact of entering in a contract consisting in paying out damages in the event of a damage caused as a result of the events indicated therein and concluded with a specialized entity. Such features are of importance for defining this kind of performances, but they cannot be fund in the dictionary definitions of guarantees. 

In its ruling dated 12 May 2023 (case file II FSK 811/20), the Supreme Administrative Court pronounced itself in the case of a company conducting activities in the Special Economic Zone. The company wanted the Court to confirm that the income it gains from activities indicated in the Zone Exemption Decision and the decision on granting investment support should be subject in the first place to exemption under Article 17(1)(34) of the CIT Act, as a result of zone exemption, and only then to exemption under Article 17(1)(34a) of the CIT Act. According to the Court, pursuant to Article 17(1)(34a) of the CIT Act, the exemption covers income from both the current activity and the new investment project (provided that it is income from the activity specified in the decision on granting investment support). Should the legislator’s intention be to actually limit the scope of the tax exemption only to a part of the income obtained from the new project, such a reservation should be directly reflected in the content of the indicated provision.