Amendment to the Tax Ordinance - what is the government planning?
The Council of Ministers' list of legislative work now includes an announcement of a significant amendment to the Tax Ordinance. The Ministry of Finance has prepared a package of deregulation measures whose main aims are to simplify tax settlements, improve relations between the tax authorities and taxpayers, and increase the efficiency of the tax administration.
According to information published on the website of the Chancellery of the Prime Minister, the draft is intended to deliver demands that both businesses and tax experts have been raising for years. The amendment covers more than a dozen specific solutions - from abandoning the pursuit of minor arrears, through new procedural deadlines, to broader procedural safeguards for parties to proceedings.
The planned changes affect many areas - verification activities, tax proceedings, security measures and appeal remedies. Below we discuss the most important of them and explain what they may mean in practice for taxpayers and business owners.
An end to pursuing arrears of up to PLN 400
One of the most widely reported proposals is a rule under which tax authorities will not initiate proceedings where the expected amount of arrears does not exceed five times the cost of an enforcement reminder. The cost of a single reminder is currently PLN 80, which means the threshold has been set at PLN 400.
What is more, if tax proceedings in such a case are already under way, the authority will be able to discontinue them. Until now, the tax authority has been obliged to conduct proceedings regardless of the amount - even where the costs of the procedure were many times higher than the arrears themselves. The new solution is intended to make tax authorities more efficient by allowing them to focus resources on cases of real fiscal significance.
This change is a pragmatic response to a problem faced by Polish tax offices (urzędy skarbowe) across the country. Conducting full proceedings over a few dozen zlotys generated administrative costs significantly higher than the potential revenue for the budget. For taxpayers, it means fewer stressful summonses over minor inaccuracies in their returns.
New rules for verification activities - more safeguards for taxpayers
The draft amendment provides for a thorough reform of verification activities, which are the basic tool for checking tax returns. The changes are both procedural and protective in nature. The most important ones are:
- A 3-month deadline for completing verification activities - until now there was no fixed time limit, which led to protracted procedures.
- An obligation to notify the taxpayer of the start, completion and outcome of verification activities - a key change that increases the transparency of the tax authority's actions.
- A broader personal and material scope of verification activities and of the catalogue of evidence that may be used within them.
- Legal protection after the check - if the authority found no irregularities during verification activities, or the taxpayer complied with the authority's findings, default interest will not be charged in future and fiscal criminal liability will not arise in that respect.
The last point is particularly important. It introduces a kind of principle of trust - a taxpayer who has passed verification activities without objections, or who has corrected a return in line with the authority's findings, gains protection against later consequences. This solution is similar to the mechanism known from individual tax rulings, where following the authority's position protects the taxpayer.
Appeals, security and other important changes
A longer deadline for appealing against a decision
The amendment provides for extending the deadline for lodging an appeal against a tax authority's decision from the current 14 days to 30 days. This is a change that both taxpayers and their representatives have been waiting for. Two weeks is often too little time to prepare a substantive appeal, especially in complex tax cases. At the same time, there will be an option to waive the right to appeal - in which case the decision becomes final and enforceable on the day the declaration is delivered to the authority, which in many situations may benefit the party.
New forms of voluntary security
The list of forms of voluntary security will be extended to include a mortgage over real estate and a pledge over movable assets or transferable property rights. The government argues that this will create wider opportunities to use the mechanism and may increase taxpayers' interest in voluntarily securing their tax liabilities.
Reduced interest and the principle of using data already held
The reduced rate of default interest, applied until now only to arrears arising from corrected returns, is to be extended to arrears disclosed in original returns filed late. The tax authority will also be placed under an obligation to use first the information and documents it already holds or can obtain from other bodies. This will reduce the burden of proceedings for taxpayers, who will not have to supply documents already in the administration's possession.
Certificate of no tax arrears in restructuring
There will also be a legal basis for issuing a certificate of no tax arrears to entities that have entered into an arrangement with creditors in restructuring proceedings under which payment of the tax arrears, together with interest, has been deferred or spread into instalments. This is an important facilitation for businesses going through restructuring.
What do the changes mean for business owners in practice?
The planned amendment to the Tax Ordinance is a step towards a more cooperative relationship between the tax authority and taxpayers. Business owners can expect fewer proceedings in minor cases, greater transparency in inspection procedures and real protection after passing verification activities. The longer appeal deadline, in turn, gives more time to prepare arguments in disputes with the authorities.
It is worth remembering, however, that the amendment is only at the legislative stage - the final shape of the provisions may change during the legislative process. Regardless, it is worth making sure now that your tax settlements are correct and that your business is set up in an appropriate structure.
For business owners looking for legal ways to optimise their tax burden, it is important that the structure of their business is properly planned - for example in the form of a limited liability company (sp. z o.o.) with a foreign shareholder, which as a rule may allow effective taxation at the 9% CIT rate while protecting private assets. However, every solution depends on the taxpayer's individual situation and requires detailed analysis.
Need support with your tax settlements? Book a free consultation
Changes to the Tax Ordinance are a good moment to review your settlements and assess whether your current way of running your business is optimal. The specialists at Global Accounting have spent more than 10 years helping businesses in Poland with full accounting services, tax advice and building effective business structures - in compliance with applicable law.
If you want to find out how the planned changes will affect your company, or are looking for a way to put your settlements in order - take advantage of a free consultation. The first 15 minutes of the conversation are completely free of charge.
Call: +48 505 684 412 or write to [email protected].
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