SLIM VAT. Bill passed without the Senate’s changes
On 16 December 2020 (Wednesday) the Senate passed the bill on Slim VAT of 27 November 2020 without any changes. The Act will now be presented to President for signature.
As we informed in our July Alert, the act introduces changes in four areas:
- Invoicing,
- Application of 0% rate for prepayments in exports,
- Common rate of exchange for VAT and CIT,
- Financial benefits resulting from the change of the chosen rules of taxation or deduction.
Presented below are the key changes in each of the above aspects:
Invoicing
Negative invoices
The seller does not need to await confirmation of receipt of a negative invoice. Reduction of the taxable base will have to be made in the account period in which the seller issued the negative invoice, provided that the seller is in possession of documents confirming consent of the buyer to the new conditions of transaction.
Such documents include, without limitation, commercial documents (including annexes to contracts), business correspondence, or proofs of payment which confirm that both parties to the transaction are familiar with and accept the new conditions of the transaction.
Moreover, entrepreneurs can apply the current solutions based on the obligation to receive a confirmation of receipt of a correction invoice by the buyer until the end of 2021, provided that the choice of the existing solutions is agreed with the counterparty in writing before the first adjusted invoice is issued in 2021. The choice of the existing solutions can be abandoned no earlier than 3 months after the end of the month in which the choice was made.
Positive invoices
Positive adjustments will be made in the settlement for the period in which the reason for increase of the taxable base occurred. This solution confirms the hitherto practice which resulted from tax rulings issued by tax authorities and from the case law. As regards the exports of goods and intra-Community supply of goods, the taxable base will be increased no earlier than in the tax return filed for the account period in which such transactions were shown. The above solution will also be used for intra-Community acquisition of goods.
With respect to correction invoices (both negative and positive) issued before 1 January 2021 and not settled before this date, the existing regulations will apply.
Application of 0% rate for prepayments in exports
The amending act extends the deadline for exporting goods to apply 0% rate on prepayments from 2 to 6 months. This means that once the prepayment (either in part or in total) is received before the goods are delivered, taxpayers can use 0% rate for exports of goods with respect to the prepayment received, provided that:
- the goods are exported within 6 months of the end of the month in which the taxpayer received the prepayment, and
- within said deadline the taxpayer received a document confirming the export of the goods outside the territory of the European Union.
The Ministry of Finance is of the opinion that extension of the time for export of the goods to half a year from receipt of prepayment will significantly improve the situation of exporters and solve the problem of long-term supplies.
Common FX rate for VAT and CIT
In line with the applied solutions, taxpayers can choose the rules for conversion of foreign currency for VAT in the same way as for conversion of income for income tax. Taxpayers are free to choose: they can also convert the currency according to the previous rules.
When selecting the common FX rate, taxpayers will be obliged to apply this solution for at least 12 successive months starting from the beginning of the month of choice.
Financial benefits
Deadline for VAT deduction
The amended regulations provide for extended deadline for deduction of VAT charged on a current basis when monthly settlements are made, up to 4 account period in total (so far the rule applied to up to three account periods). Taxpayers who settle VAT on a quarterly basis will still be entitled to deduct the VAT charged on a “current” basis in the account period in which they acquire this right or in 2 subsequent account periods.
Gifts
A change was also made to the unit price of a low-value gift which does not require to be entered in the records; the value was increased from PLN 10 to PLN 20. The annual value of PLN 100 remains unchanged if the taxpayer keeps the records.
Services of overnight accommodation
The change made to overnight accommodation services consists of the possibility to deduct VAT charged on services acquired by taxpayers only for the purpose of their resale (i.e. when the service is re-billed). Other acquisition of overnight accommodation services, i.e. acquisition by the taxpayer for the purpose of the taxpayer’s business activity, remains non-deductible.
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Should you have any questions or doubts regarding the issues discussed here, we are ready to assist you.
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