In Europe, Poland seems to be the first country to move away from the traditional VAT return replacing it with a detailed Standard Audit File for Tax (SAF-T). This is basically an expansion of the SAF-T system already used in Poland since 2016. Large enterprises must start working with the expanded SAF-T system from April 2020, and from July 2020 it will be mandatory for all taxpayers in Poland. Failure to submit or report wrong information will result in high penalties. Clearly this increased VAT reporting requirement is putting further tax compliance pressure on companies who must prepare for this big change.
The SAF-T in Poland is called JPK (Jednolity Plik Kontrolny). The current SAF-T system became mandatory on 1 July 2016 for large businesses and since 2018 for all taxpayers in Poland. Under the current requirements, all VAT registered businesses in Poland need to submit monthly SAF-T reports (called JPK_VAT) and simultaneously monthly (or quarterly) VAT returns. The current JPK_VAT should include all information concerning transactions included in records kept for VAT purposes and needs to be submitted in a specific xml format to the tax authorities. The current VAT return contains sums of values of various kinds of transaction as well as the total VAT to be paid, refunded or carried forward to the next period. In addition to these periodical submission requirements, businesses must also be ready to transfer various accounting JPK structures at the request of tax authorities during tax proceedings, verification activities and audits. This includes the following JPK structures:
- JPK_KR, which includes data from the main trial balance and general ledger journal
- JPK_WB, which includes bank statement balances along with detailed records from the taxpayer’s accounts
- JPK_MAG, which includes receipts, release and internal movement transactions information
- JPK_FA, used for reporting information concerning sale invoices for a given period
- JPK_PKPIR to record tax revenue and expense ledger
- JPK_EWP to record revenues.
What’s changing in 2020?
In the new system the current JPK_VAT and VAT return will be replaced by an enhanced JPK_VAT structure called JPK_VDEK (although this is a working title potentially subject to change).
This will be a periodical filing requirement and should include all information already covered by the combination of the current JPK_VAT and the VAT return. Basically, new fields are added to the existing JPK_VAT file with company VAT return information. The authorities explained that the information in this new version SAF-T for VAT is enough to meet all periodic data requirements. The simplification is that it eliminates attachments that are currently required when submitting a traditional VAT return (i.e. VAT-7, VAT-7K, VAT-ZZ, VAT-ZD and VAT-ZT).
However, the new JPK_VDEK is not only a simplifcation. It also introduces additional reporting obligations. Such as a requirement for additional settlement data across a variety of specific transaction types and the introduction of a series of markings (codes) making it easier to identify transactions in certain types of goods and services (i.e. additional fields that are aimed at increasing the precision of analysis carried out by the tax authorities).
Like the current JPK_VAT and VAT return, the new JPK_VDEK is tax information which needs to be submitted to the tax authorities on a periodical basis. (Taxpayers filing monthly will submit version JPK_VAT7M, whilst those filing quarterly will instead submit version JPK_VAT7K). Accordingly, failure to meet submission deadlines and/or report wrong information may result in penalties for every error the new file contains. The Polish tax authorities have proven to be very strict on content requirements and apply penalties on any missing obligation. Also, the number of tax audits using SAF-T has increased substantially since the introduction of the SAF-T system.
In summary, it is crucial for businesses to adapt to this expanded electronic tax reporting system as soon as possible – not only to meet the deadline for the new SAF-T report for VAT, but also to meet the increasing requests for the additional accounting SAF-T reports.