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Poland SLIM VAT 3 reforms update

Third round of SLIM: Simple, Local and Modern VAT reforms

The Polish government has published last month comments on a draft Bill to introduce a range of VAT simplifications – known as SLIM VAT 3.  This follows the completion of a public consultation earlier this year. The final legislation for a range of over 20 measurers (see bellow) should be in place for January 2023. This includes raising the VAT registration threshold, harmonising rules with the EU VAT Directive, a sugary drinks tax and settling other taxes against VAT credits.

SLIM VAT is an international concept around simplifying and adapting national VAT regimes for local needs.

SLIM VAT 3 consultation

Poland launched a public consultation on latest round of VAT compliance simplifications – SLIM 3. The previous reforms, SLIM VAT 2 and SLIM VAT 1 where launched at the start of 2022 and 2021, respectively.  They represent a wide collection of changes by the Ministry of Finance to the VAT Act and calculation, invoicing, reporting and interactions between takepayers and the Polish tax office. The pre-consultation lasted to 23 February, and the full consolation until 14 August 2022.

SLIM VAT 1 focused on exchange rates, VAT deductions and advance settlements. SLIM VAT 2 included split payments and invoice simplifications.

SLIM VAT 3

There are over twenty reforms pencilled in for SLIM VAT 3. The package covers seven areas:

  1. VAT liquidity, and easing split payment funds use rules
  2. More VAT exemptions
  3. Reducing complex correction requirements, including FX where changes on a correcting invoice
  4. Simpler invoicing rules, including on advance payments invoice rules and deductions on intra-community supplies
  5. Reduce penalties and sanctions on voluntary disclosures and post-audit adjustments
  6. Clearer VAT binding rulings and certainty
  7. Easing of cross-border reporting obligations for zero-rating B2B transactions where supporting documents were not immediately available

Included in the thresholds for small taxpayer (maly podatnik) status from €1.2m to €2m per annum. More businesses will be able to use the cash-based VAT accounting as a result.

SLIM VAT features

SLIM VAT systems were conceived for developing countries seeking to implement or update their VAT regime. Angola’s SLIM VAT system was introduced in 2019. The common features of SLIM VAT initiative include:

  • Simple, as it should establish a broad scope for the tax, with a reduced number of exemptions and with simplified tax calculations
  • Local, as it should be suitable for the adopting country’s national reality and socio-economic context
  • Modern, as it should have a digital component and it should follow the international best practices in dealing with tax fraud and evasion

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