The Ministry of Finance has published a draft of broad amendments to the Tax Ordinance. For the time being, the draft is at the stage of the so-called pre-consultation. Due to the end of the parliamentary term, it is not certain whether these changes will be adopted in the coming months. Below, we present a synthetic description of the most significant changes.
The most important change is the introduction of a validity period for tax interpretations (5 years). The changes will also cover interpretations already in force – those issued before 1 January 2019 will expire on 1 January 2024, and those issued after 31 December 2018 and before 1 January 2024 will expire 5 years after the date of their issue.
The fee for issuing them will change – it is to be linked to the minimum wage. Today, it is PLN 40 and this rate will be maintained for individuals not conducting business. In turn, the largest entities are to pay PLN 2,800.
The authority will also be able not to issue individual interpretations when tax explanations have been issued on a similar issue.
The authority will be able to turn to bodies with specialist knowledge. This is a positive solution, practised today e.g. in proceedings for the issuance of binding rate information.
“Partial” decisions in transfer pricing
It is proposed that assessment decisions can only be issued in respect of transfer-price controlled transactions. This is a further step towards intensifying proceedings and disputes regarding the margins and other conditions applied by taxpayers in related party transactions.
Importantly, such a decision will not close the accounting period against subsequent proceedings.
Limitation of tax liabilities
Another proposal is to suspend the statute of limitations on tax liabilities by, inter alia, the very initiation of a customs and tax control. This is a decidedly negative solution for taxpayers, giving tax authorities significant opportunities to ‘fight’ the statute of limitations.
Abolition of tax audit and other changes to procedures
The Ministry of Finance wants to abolish tax audits conducted by heads of tax offices. They are to focus on inspection activities, and the basic inspection procedure is to be customs and tax control. This is a negative change, as the rights of the auditee will be limited by this.
A new type of procedure is introduced – simplified procedure. The procedure is to be formalised, faster, based on evidence presented by the party or known to the authority ex officio. The limit for the tax liability in this procedure is PLN 5,000.
Binding Classification Information
A further type of information is envisaged, which is to cover classification for the purposes of the Combined Nomenclature (CN) or “national” classifications (e.g. PKWiU). The institution is to resemble other information, notably the Binding Rate Information. This concerns, in particular, the five-year validity of the information or the binding nature of the authorities and the applicant.
Other selected changes
- introduction of the possibility to remit the tax before its due date;
- the abolition of the requirement to submit a “separate” request for a declaration of overpayment where the overpayment results from a corrected return (declaration);
- allowing tax to be paid for a taxpayer by persons outside his immediate family up to the amount of PLN 5,000 (currently it is PLN 1,000);
- introduction of a “cascade” tax liability of members of the management board of a capital company which is a general partner in a limited partnership or a limited joint-stock partnership for the arrears of that limited partnership or limited joint-stock partnership;
- sealing the system to prevent the use of the financial sector for tax evasion by, inter alia, extending the possibility of blocking to new categories of accounts or regulations on the suspension of certain activities”.