September 17, 2018 / Law /

Ministry of Finance published guidelines of new matrix of VAT rates, which is designed for purposes of excluding absurdity relating to application of various VAT rates to basically the same goods. At present, according to VAT act on classification of respective goods to suit preferential VAT rates (5% or 8% instead of 23%), grouping of goods determines in Polish Classification of Goods and Services (PKWiU). Since 2019, whether a specific merchandise is taxed at a lower rate is decided by UE combined nomenclature (appropriate CN code), and in case of services – grouping in PKWiU 2015. Change will also cause that part of goods, which is currently treated as preferential, shall be covered by a basic rate since a new year, whereas some goods shall be treated with a lower VAT rate.

Remedy for entrepreneurs’ ills arising from disputes with tax authorities over application of proper VAT rate (the Treasury was challenging the Statistical Office time and time again as regards grouping of a particular merchandise) is introduction of a binding piece of rate information (WIS). By request of entrepreneur, the tax authority shall issue WIS in the form of administrative decision, which is to settle the VAT rate for a given merchandise. If entrepreneur does not agree with the Treasury’s stance, he/she will be able to lodge a complaint to Administrative Court. Suggestions by the Minister of Finance ought to be assessed positively and one should hope that particularly regulations concerning WIS shall be brought into effect as soon as possible. According to many entrepreneurs, lacking confidence in application of VAT rate amounts to a major impediment to running the economic activity.