Ministry consults on changes to Tax Ordinance
Changes to the way individual interpretations are issued
One of the key changes proposed in the bill is an amendment to the provisions on individual interpretations. According to the proposals presented by the Ministry of Finance, the fee rates for issuing interpretations will be valorised. The fee is to be linked to the minimum remuneration for work and, according to the draft, is to be no higher than 100% of that rate. An exception would be interpretations issued to natural persons not conducting business activity, for which the fee is to be no more than 1% of the minimum remuneration for work.
For taxpayers, this means a large increase in fees for issuing an individual interpretation. Let us recall that currently, this fee for one question indicated in an application for an interpretation amounts to PLN 40. For comparison, the minimum remuneration in 2024 is to be PLN 4300. At the same time, the Ministry stipulates that the amount of the fee will be determined by a separate regulation. According to the draft, the fee is to be determined by the jurisdiction of the tax office. According to the ministry's proposal, taxpayers falling under:
- First Mazovian Tax Office - will pay at least PLN 2 800 for an individual interpretation,
- Tax office other than the locally competent one (e.g. voivodeship tax offices) - will pay at least PLN 1 400 for an individual interpretation,
- Tax office with local jurisdiction - will pay at least PLN 400 for an individual interpretation.
In contrast, the cost of issuing a collateral opinion will increase from PLN 20 000 to 10 times the minimum remuneration (PLN 43 000).
The Ministry points out at the same time that the proposed distribution of fees is intended to reflect the financial capacity of taxpayers accurately and, simultaneously, to reduce the losses generated by the KIS (National Tax Information). Nevertheless, the proposed changes keep the fees for issuing an individual interpretation for natural persons not conducting economic activity at the current level. Such an action seems to contradict the purpose of the changes presented by the legislator.
Moreover, individual interpretations will not only, as before, protect only one taxpayer, even if another entity shows the same facts as those presented in the interpretation, but they will additionally be given a validity period. The legislator proposes that individual interpretations should be valid for 5 years from the date of their issue or modification. Importantly, the Ministry also points out that if an application is made to extend the interpretation for a further 5 years, it will be possible to indicate the original interpretation. However, this applies only to situations in which the taxpayer's factual situation has not changed at all during the validity period of the interpretation. In such a situation, the taxpayer may indicate the reference number of the interpretation that is about to expire, and then it will not be necessary to provide a comprehensive description of the facts (future event). Obviously, the taxpayer will be forced to pay another fee for an application for renewal (issuance of a new) interpretation, which the KIS will not analyse in depth, because it will base the interpretation on a previously issued thesis.
At the same time, the Ministry announced the termination of all individual interpretations issued before 1 January 2019. According to the draft, they are to expire on 1 January 2024. For most taxpayers, this means the need to reapply for an individual interpretation.
Tax inspection for the head of National Tax Administration (KAS), but not for the tax office
The Ministry of Finance proposes, as a further amendment, to take away the power of heads of tax offices to conduct tax inspections. According to the legislator's calculations, the effectiveness of tax inspections is decreasing from year to year. On the other hand, the efficiency of the checking activities conducted is increasing.
According to the draft bill, the tax offices are to be deprived of the opportunity to conduct inspections, precisely for the benefit of the extended competences under checking activities. Nonetheless, tax inspections are to remain the competence of the head of KAS and the authorities of local government units.
It should be noted that checking activities are a far less formalised procedure than a tax inspection. Under checking activities, the authority verifies de facto the taxpayer's tax settlements, including the correctness and timeliness of submitted returns and paid taxes. In the current form the tax authorities are not in a position to verify the correctness of the taxpayer's interpretation of tax law. Thus, the authority, when conducting checking activities, cannot, for example, question the right to deduct calculated VAT if tax declarations and records have been completed correctly in the relevant scope.
Under the proposed changes, the concept of checking activities is to be significantly expanded. The new checking activities are to allow tax offices to check a taxpayer's compliance with obligations under tax legislation. The redefinition of checking activities significantly expands the scope of powers of tax authorities and allows heads of tax offices also to verify the timeliness of submission of financial statements or completion of eligibility for Estonian CIT and any data and documents presented by taxpayers to KAS authorities, payers, collectors or other obliged entities. Until now, the offices have only verified registration documents in the above regard.
Checking activities will also come out of the tax office premises. The amended regulations allow offices to conduct visual inspections and interview witnesses. Until now, these tools have been most commonly used during tax inspections.
Revolution in legislation
The changes in the way individual interpretations are issued and operated and the effective abolition of tax inspections mean that the situation of taxpayers is deteriorating. With annual changes in tax legislation, initiated by the tax office itself, there is a proposal to increase the burden at the expense of the taxpayers concerned. It is no surprise that the cost of issuing a single interpretation and their number is growing exponentially. It is unreasonable to pass on the cost of interpreting complex tax legislation to taxpayers.
At the same time, under the cover of the abolition of tax inspections, the scope of the checking operations is being expanded. Taxpayers, being left without a formalised procedure that protected them from abuse by the office during tax inspections, will be left practically defenceless against the tax proceedings that follow tax inspections. The Ministry of Finance punishes taxpayers for mistakes it makes in almost all proposed changes.
Learn more: Full list of the Ministry of Finance's proposed changes to the Tax Ordinance
Link to draft: Tax consultation on amendments to the Tax Ordinance - Ministry of Finance - Gov.pl Portal (www.gov.pl)
