– Only a part of the changes proposed in the Tax Ordinance follow the guidelines established by the authors of the draft, which involved simplifying and rationalizing taxation procedures. Some solutions may create significant burdens for taxpayers and be harmful for economic activity and the relationship between entrepreneurs and tax authorities – remarks Mariusz Korzeb, expert of Employers of Poland and tax adviser.
Amendments to the draft of the changes in the Tax Ordinance suggested by the Ministry of Finance have recently dominated the discussion on tax law. The draft includes many controversial solutions which may have a negative impact on economic activity and are a cause for worry among taxpayers. Employers of Poland, working for the benefit of entrepreneurs and with a view to improving the legal environment for entrepreneurship, have brought their doubts and reservation to the attention of the Ministry.
Business circles negatively assess the changes with regards to individual interpretations, a.o. the issue of broadening the catalog of situations in which the tax authority may issue a decision that it will not issue an interpretation. The case when an actual situation or future event presented in an appeal for an individual interpretation is identical with a previously issued general interpretation is a source of particular doubt. Entrepreneurs worry that taxpayer protection resulting from the fact that an individual decision has been issued may be restricted, as the legislator did not include the possibility of filling a complaint regarding general interpretations to the administrative court, which results in such interpretations being exempt from control with regards to their compliance with the law.
With regards to changes in the subject of individual interpretations, the assumption that extending an anti-tax evasion clause over a taxpayer results in an exemption from protection provided by an interpretation. The authors have not presented a solution in case of a change in a decision on extending the clause over an entrepreneur who had failed to finalize a transaction, lost profits or contracts as a consequence of being denied legal protection.
The imprecise definition of situations when the taxation organ may appeal for the interpretation to be issued without prior examination may also be harmful for entrepreneurs. This is a severe sanction which should not be used in situation when the regulation does not clearly specify the conditions which have to be met for the application to be accepted. This is a violation of the principles of appropriate legislation.
However, the cause of the biggest controversy is the anti-tax evasion clause. In light of the prior negative assessment of the clause by the Constitutional Tribunal and its key role in shaping a future relationship between the taxpayers and the tax authorities, the introduction of the clause should be carried out properly and transparently, through real dialog with the broadest possible group of interested parties, including a significant participation of entrepreneurs. Sadly, the legislators have decided to forego such a step and proposed a very repressive solution, which presents a serious threat to the development of entrepreneurship in Poland.
These rash action have caused the regulation introducing the clause to be imprecise, as it includes blurred notions, defined in the justification of the draft with further unclear terms. All this defeats the very purpose of introducing an anti-tax evasion clause, that is implementing mechanisms contributing to the combat against tax violations. The clause may have the opposite effect, that is, it may provide the tax authorities with a repressive tool, which - in its imprecisely defined form – may cause many abuses.
The twofold increase of interest rates for outstanding VAT and income tax is a further harmful change. This means that the rate will be 20 percent per year. The legislator citing the facts that VAT and excise bring most income of all taxes and that indirect taxes are the main source of budget income, while also being most exposed to tax abuses is a manifestation of excessive fiscalism, which may harm all economic entities, not only those involve in the contemptible practice of tax abuse.
Another negative change is the introduction of a regulation which states that overpayment will be treated as the payment for outstanding tax starting on the day when it is revealed by the taxpayer or tax authority. This is a very far-reaching change, which may burden taxpayer with the costs of interest on outstanding tax in situations when the state budget had incurred no damage. As a result, It may worsen the taxpayers’ position by increasing the fiscal burdens in an unjustified manner.
Despite the fact that the draft of amendments to the Tax Ordinance involves a few positive changes, they are overshadowed by a number of solution harmful for taxpayers.
Entrepreneurs hope that the Ministry of Finance will consider the potential consequences of suggested changes once again and change them, so that they will not be harmful for economic activity.
Mariusz Korzeb, expert of Employers of Poland, tax adviser