Poland’s step-by-step plan to narrow their VAT gap

Alicja Kwiatkowski
December 13, 2018

Narrowing the VAT gap has been one of the main priorities for the Polish government since 2015 and is one of the flagship goals of the governing political party ‘Law and Order’. The main reason is economic as VAT revenue constitutes around 40% of the country’s budget. However, this topic is also a national political debate and the Polish parliament is currently preparing to set up an investigative commission for VAT to find out whether the previous government committed VAT abuse as the VAT gap increased during the period 2008-2015.

The Polish government has in previous years taken several concrete steps to narrow the VAT gap. They are not trying to reinvent the wheel, but rather gain inspiration from other countries, mainly within Europe so far.

Here are the main steps taken:

SAF-T (JPK) reporting, July 2016-July 2018

The requirement for SAF-T reporting (in Pl: JPK, Jednolity Plik Kontrolny) was introduced through multiple amendments of the Polish Tax Ordinance. An obligation for monthly reporting of the VAT evidence/register through SAF-T (JPK-VAT) was gradually introduced from 2016 starting with big companies expanding to micro businesses on 1 January 2018 for monthly reports and from 1 July 2018 for reports upon request. There are seven SAF-T logical structures regulated in Poland. Apart from the above-mentioned VAT SAF-T report, which must be actively sent monthly, other SAF-T reports such as invoice data must be provided if requested by the tax authority.

Split payment, July 2018

From 1 July 2018 Polish companies can pay invoices using a split payment. This means the purchaser can pay the VAT direct to the dedicated VAT bank account of the supplier. The supplier has limited rights to using the money in its VAT bank account, the purpose of which is to ensure that their VAT related liabilities are paid. Originally the Polish government wanted to make split payments mandatory from the outset. However, research showed that Polish taxpayers are not yet ready for such a step and therefore incentives for using split payment have been introduced, such as VAT deductions and smoother VAT return procedures. The idea to introduce split payment originated from Italy and Romania, where it was introduced a couple of years earlier.

Central Register of Invoices, planned for 2019

On 4 December 2018 the Polish Ministry of Finance published a bill amending the VAT Act and the Tax Ordinance, aiming at, among other things, introducing the Central Register of Invoices (CRI). The introduction of CRI is planned for 1 July 2019 and will be operated by a Country Fiscal Administration (CFA). The expected result is to gain visibility over VAT-able transactions. Through the register, CFA intends to be able to gather data, analyze it and follow up with taxpayers. The data gathered will be based on VAT SAF-T reports and not directly on actual invoices. The same amendments introduce rules for substituting current VAT SAF-T report (JPK_VAT) by a more detailed report which will replace monthly and quarterly VAT returns (JPK_VDEK), also from 1 July 2019.

With this new political wave, Poland is concentrating on narrowing their VAT gap. This is also a growing trend across Europe with measures such as SII in Spain, RTIR in Hungary and LatAm-style clearance of e-invoices in Italy. Poland has chosen to adopt a step by step approach, with more and more intrusive measures and it is predicted in the not-too-distant future that all invoices will need to be issued in electronic form, in a structured XML format, to enable efficient tax control and provide the state with greater visibility over VAT.

Take Action

Find out how Sovos keeps companies prepared for new VAT enforcement mandates. 

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Alicja Kwiatkowski

Alicja Kwiatkowski is a Legal Counsel at Sovos TrustWeaver. Based in Stockholm, Alicja’s background is in law and IT with a professional focus on international e-invoicing compliance, personal data protection and cyber security. Alicja earned her degree in Law from University of Warsaw, Poland and LL.M in European IP Law from Stockholm University, Sweden.
Share This Post

EMEA Tax Compliance VAT & Fiscal Reporting
November 13, 2019
Revisiting the EU VAT “2020 Quick Fixes”

Part 3:  Chain Transactions This is the third in a series of four blogs providing explanatory detail to the EU’s “2020 Quick Fixes” that aim to standardise certain VAT rules throughout the EU. Part one of this series focussed on VAT Identification of the Customer, whilst part two provided guidance on the Exemptions of Intra-Community […]

E-Invoicing Compliance EMEA
November 12, 2019
Will the myDATA Project be Delayed in Greece and Mandatory E-Invoicing be Introduced?

Two months after closing the public consultation on the myDATA scheme, the Greek tax authority, IAPR, has yet to share the feedback received from the industry on the proposed scheme or make any official announcement in this regard. However, local discussions indicate that, the IAPR may reintroduce its initial agenda proposed back in August 2018, […]

Tax Information Reporting United States
November 7, 2019
IRS Tax Gap Data Previews the Future of 10-series Reporting Requirements

A recent fact sheet released by the IRS shows the latest tax gap estimates and overall taxpayer compliance and demonstrates why the IRS is likely to strengthen its tax reporting enforcement policies. The findings are based on data from tax years 2011, 2012 and 2013. The purpose of this document is to let the public […]

Sales & Use Tax United States
November 7, 2019
Improving Sales Tax Automation in Manufacturing

Managing manufacturing sales tax is complex for a number of reasons. You may have thousands of SKUs with taxability rules that differ across states, as well as hundreds, if not thousands, of exemption certificates to track and keep up to date for your customers. Additionally, tracking your own inventory for materials used internally that are […]

EMEA Tax Compliance VAT & Fiscal Reporting
November 6, 2019
Revisiting the EU VAT “2020 Quick Fixes”

Part 2: The Exemptions of Intra-Community Supplies of Goods This is the second in a series of four blogs providing explanatory detail to the EU’s “2020 Quick Fixes”. This article focuses on updated guidance around the Exemption of Intra-Community Supplies of Goods coming into effect on 1 January 2020.    The EU Implementing Regulation contains a […]