SLIM VAT – What is it? Easier correction of an invoice?
August 31, 2020
The Ministry of Finance in Poland responds to expectations of entrepreneurs and presents a “SLIM VAT” project. This is a package of simplifications in VAT reporting, resulting from an audit of regulations carried out by the Ministry of Finance, which was aimed at taking into account small and medium-sized business.
Slim VAT elements
- facilitation of correcting invoices
- correcting invoices in-minus – no confirmations required
- changes to correcting invoices in-plus
- advances for exporters
- shared exchange rates
- benefits when deducting VAT
- VAT deduction in the case of purchase of accommodation services for resale
- extending the deadline for deducting VAT incurred on an ongoing basis, up to 4 periods, with monthly settlements
- gifts of small value – making the amounts real
Therefore, SLIM VAT is to introduce changes in four areas of current tax regulations.
Easier correction of an invoice
Correcting invoices “in-minus”
There will be no need anymore to obtain a confirmation of receipt of correcting invoice by a customer or a buyer goods.
This way, during the period of issuing a correcting invoice appears the possibility of reducing the tax base and output VAT. However, there is one condition. A taxpayer must have documentation proving that he has agreed with a customer or a buyer of goods on terms of the transaction. On the other hand, in the same period, the buyer is obliged to correct the input tax.
It is certainly supposed to simplify settlements, due to the lack of need to collect documents. Similarly, waiting for a delivery of the correcting invoice is a plus. The lack of the obligation to make corrections to the declaration can be considered certainly as an advantage.
Correcting invoices “in-plus”
When it comes to corrective invoices in-plus, there has been no legal provision defining their settlement so far. Therefore, taxpayers had to rely on a interpretation line and jurisprudence. Now this is to change by introducing appropriate provisions in the VAT Act. Hence, taxpayers will have certainty as to the method of settlement made on an ongoing basis during the period of issuing the correcting invoice (due to reasons arisen after the sale).
More time for exporters
The moment of exportation of goods is to be changed. To apply the 0% rate on the advance payment in the export of goods, the export will have to be made within 6 months (extension from 2 months). This solution aims at improving the situation of exporters. It will also help with problems in case of long-term supply.
Exchange rates not complicated anymore
It often takes a long time for a taxpayer to determine appropriate exchange rates for one transaction. SLIM VAT will change it. The taxpayer is to apply the same rules of currency conversion to VAT as for calculation of income tax. This means one shared exchange rate in VAT and PIT / CIT instead of two different ones!
Financial benefits of SLIM VAT
4 months until VAT deduction
When billing monthly, the right for VAT deduction will be extended from three to four months. In such a case, a taxpayer will be able to include an invoice within four months from the date of receipt of the invoice. This change is intended to eliminate unnecessary corrections of VAT declaration.
Invoices for the purchase of lodging services in order to resale them – VAT deduction
New regulations are to make possible VAT deduction for taxpayers purchasing lodging services for their business clients. Undoubtedly, this solution is the Polish government’s response to market needs.
Gifts of small value up to PLN 20 without unnecessary formal obligations
The limit of one-time small-value gifts is also to be changed from PLN 10 to PLN 20. As a result, the amount was get closer to the European Union average.
To sum up, the date of introducing SLIM VAT is not known yet. So far it is a bill presented by the Ministry of Finance. However, considering entrepreneurs, who are currently required to document more and more detailed transactions, changes will certainly come into effect.
Author: Katarzyna Zawolska
