In Poland, we have a dramatic situation in terms of the scale of fraud VAT, we need to caulk your system without waiting for a change in EU law – points out in an interview with PAP Roman Namysłowski, a partner at Crido Taxand, a member of the Consultative Council Tax Law and member of the Tax Expert Group.
VAT Expert Group is an advisory body appointed by the European Commission, which deals with giving opinions on proposals for legislative changes in the field of VAT at EU level.
PAP: the government plans legislation announced several changes bills that are aimed at reducing the scale of fraud in VAT. Meanwhile, their proposals prepared by the European Commission. Can wait for changes in EU law?
Roman Namysłowski The current rules governing the settlement of VAT in the supply within the EU (ie. An intra-Community supply of goods WDT) was established in 1993. As a transitional regime for three years. It’s been 23 years, so it’s time to change it . As we look at the work schedule resulting from the Commission’s proposal, it appears that the Commission is not in a hurry: the earliest the new rules will apply from 1 January 2018. Meanwhile, in Poland we have a dramatic situation in terms of the scope and scale of irregularities VAT fraud. We are talking about 50 billion zł gaps in the VAT, which is about one-third of the revenue from the tax. 2018. Lose another 100 billion zł.
The EC’s proposals relate to changes in the system and there is no need to wait for their introduction. We have to act on their own field, to do their own – to make changes, which are designed to seal the tax system, as far as possible. I need to do it as soon as possible. Given the assumption that at the beginning of the year made the government, we have a delay. I hope that the work will accelerate and change quickly come into force.
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PAP: So far finance Ministry wants to eliminate the possibility of settlement of quarterly VAT . This is the subject for a long time. Could benefit from this solution?
R.N .: This proposal formulated last year by the Council Tax acting the Minister for Finance. To accelerate the flow of information. Criminals consciously use quarterly figures, since only three months after the tax authority knows that someone has not declared and not paid tax. And in three months you can extort tens of millions of dollars. Shortening the period from quarter-to-month certainly will accelerate the flow of information and identification of fraudsters.
PAP: This combines the concept of introduction for some taxpayers mandatory filing electronically.
RN: it is also a proposal of the Council Tax. Now criminals are composed of paper tax returns in a remote post office, which reach to the tax office after a few days. Office delayed knows what is happening, has less time to draw conclusions. These are not complicated changes, the more that we pride ourselves on that every year more and more taxpayers are settled electronically.
PAP: They have to be put limits on transaction value above which will be used inverted VAT. Currently, the limit of 20 thousand. zł applies only to electronics. Such a mechanism would be introduced in relation to all other commodities, which today are covered by the reverse charge mechanism. What is the purpose of these changes?
R.N .: Reverse VAT on short-term is effective in eliminating pathology, but should not be used as a solution to the target . It carries certain risks that are associated with retail sales. We noticed that eg. The sale of steel bars under reverse VAT dishonest taxpayers, individuals, buy bars (because they are eg. During construction home) posing as company and giving a VAT taxpayer. As a result, VAT is not charged or discharged, and the bars disappear in the concrete. VAT is not discharged by either the supplier or the buyer. The introduction of the limit will make smaller transactions in goods covered by an inverted VAT will involve the issuance of invoices and the charging of the tax.
PAP: Do you agree with the postulate of the extension of reverse charge for the following goods?
RN: European Commission proposes to extend the reverse charge mechanism, but did not agree that in some countries to introduce common reverse VAT on everything. The tax in this form makes the VAT ceases to be a convenient tool fiscal. In many countries, VAT brings the main budget revenue and is safe from the point of view of public finances. This tax is not paid only at the final stage of marketing, but in small portions spread over the entire supply chain. The risk of non-payment of VAT in general is so spread out. If the load reverse the income of the state budget is dependent on the taxation of final sale. If something happens at this stage, it is the state budget. In addition, the VAT is a self-regulating mechanism: the buyer, which depends on the deductible, in a sense forcing controls reseller invoice. And this in turn is evidence of business transactions indicating that the tax should be paid to the office. This self-control is flipped with the state authorities on taxpayers. And in the opposite load this mechanism does not exist, there is no incentive to disclose trading on the last stage. It is true that the introduction of reverse VAT on some goods helped eliminate some pathologies, but revealed they are in other places.
PAP: is also planned to extend the joint and several liability, which lies in the fact that the buyer eg. Fuel may be responsible for tax liabilities seller, if this does not settle the tax authorities. It is an effective tool to combat phishing schemes VAT?
R.N .: This preventive mechanism, makes one think twice purchasers from whom they buy goods. But the same joint and several liability does not solve the problem. Besides, sometimes this tool is abused by the treasury; easily hurt the innocent taxpayer. On the occasion of changes in regulations worthwhile to have to think over their fine-tuning to such a situation was the least. The controversy also raises the amount of deposit, which exempts from the joint and several liability. True, it increased from 3 million to 10 million zł zł, but for those who trade in fuel is a really small amount. Criminals selling fuel 10 million zł which includes the cost of the operation, which reduces profit, treat the deposit as an insurance policy. Some even manage to withdraw the deposit in time, before the tax office have time to take it over.
PAP: The Ministry of Finance would like also to allow for refusal of entry in the VAT register or delete the taxpayer from such a register. Is the IRS lacks such regulation?
R.N .: Today to print invoices simply register for VAT in the tax office. Refusal of the suspected companies is therefore the most justified. Over the past years, we were chasing the so-called. one window and registration of the taxpayer in one day – which generally was right – but we lost somewhere along the way the other side of the coin. Criminals in one day can register activity and issue a VAT invoice. There are those who have registered several dozen or even more companies waiting to run. So far, no one checked whether a company really wants to run a business. Meanwhile, in countries where previously they realized that there are dealings VAT fraud are not registered automatically of economic activity. This of course prolongs the process and this must be reckoned with. Something for something – or want to lose 50 billion zł per year, or we want to reduce this gap, some at the expense of a longer process. By restricting the registration should think about balanced regulations for removal from the registry if we have suspicions that the company is a pillar.
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