The Ministry of Finance wants to fight the payment of wages “under the table”. In the tax sealing package, he proposes, inter alia, that after disclosing such a payment, it is the employer, not the employee, that must pay the arrears to the tax office. The scope of the changes also applies to corporate income tax, i.e. CIT, but also social security contributions, personal taxes and VAT.
– In terms of the increase in impacts, see the Regulatory Impact Assessment for the exact effects. When it comes to corporate income tax, we are talking about an increase in revenues from this source by 10 percent only from sealing measures. The burden will be placed on large international corporations, which will have less possibility of transferring tax-free income outside Poland – said Aleksander Bearingkowski, director of the income tax department at the Ministry of Finance.
Tax sealing package
As he added, the fight against tax havens and siphoning off profits from Poland is one of the pillars of the package, the aim of which is to tighten the tax system in terms of CIT.
– The proposed solutions are based on those that have already been successfully introduced in other countries. They will strengthen existing regulations that have already had positive effects. We are talking, for example, about the issue of a controlled foreign company, a regulation that has a preventive effect, but there are also a few issues that have been identified and which make the effects of these solutions not as clear as what we wanted to achieve – said director Świątkowski.
The essence of the Controlled Foreign Company (CFC) regulations already operating in Poland is the obligation to include in the tax base of a domestic tax resident (natural person and corporate income tax payer) income obtained by a controlled foreign entity with a place headquarters or management in a country with a lower taxation level than that in force in the country of residence of that resident. Now their scope has been extended to include changes based on solutions operating, inter alia, in Germany, UK and Spain.
Sealing – tax havens
– Another solution that we are introducing is based on the concept known abroad, the precursor of which was Great Britain, and which is called the diverted profits tax. This solution consists in reversing the rules on which the CFC regulations operate, so it will not apply to a situation where a Polish company has a company abroad to which it sends income in order to obtain lower effective taxation and this income must be added to the tax base. in Poland. This solution will apply to a situation in which a foreign corporation has subsidiaries in Poland and this income is transferred from Poland to the countries where the parent company or companies controlling the Polish structure have residence – said director bearingkowski.
He added that these regulations are calibrated to cover only those foreign companies that have relations with Polish subsidiaries structured in such a way that the income generated here is siphoned off from our country. – This applies to the most glaring and obvious patterns of tax avoidance or aggressive tax optimization. As a result, companies that invest here, conduct their business and do not use aggressive optimization practices, will not be included in them – assured director bearingkowski.
He also added that as part of the package, the issue of residence was clarified when it comes to capital companies. – Polish regulations in this respect raise doubts in comparison with solutions from other countries, so we will change them in order to respond to what should be understood by the company’s residence or by the management board – said director Świątkowski.
He also added that the package will include exit tax solutions on unrealized income. There will also be solutions for taxing hidden dividends. – We have supplemented the regulations on what is called payment of hidden profits or payment of hidden dividends. It is a situation when certain circumstances indicate that funds are being siphoned off the company in order to avoid tax on dividends. We wanted to supplement the regulations, whether in the field of tax deductible costs or the general tax avoidance clause, with tools that could be used directly in the case of dividend tax avoidance, without resorting to less suitable structures or solutions in such a situation – he said director bearingkowski.
Payout “under the table” – proposed changes
In addition to the fight against tax avoidance by foreign companies or Polish companies with foreign branches, the Ministry of Finance introduces solutions facilitating the fight against the shadow economy as part of the sealing package. They have, inter alia, prevent employers from paying part or all of their wages “under the table”, so without paying social security contributions and without taxes.
– At present, the regulations mean that there is a certain solidarity between the employee who receives the wage “under the table” and the employer who pays it. The point is that an employee who would like to disclose such a remuneration must first of all, without the help of the payer, prove such income in the tax return, and then calculate the tax and pay it himself. In this situation, it does not pay for him to inform about irregularities in the payment of salaries – said the director at the Ministry of Finance.
He explained that in the sealing package, the ministry proposes a change in which the employer will have to pay taxes entirely after disclosing that the payments were made “under the table”. – We want the employer to be fully responsible for tax obligations in the event of irregularities being discovered. So he will have to take from his costs and add to revenues what he paid “under the table”, and in addition he will pay an additional sanction, equal to the tax on the minimum wage. This gives a chance to break the solidarity with the employer who pays the funds “under the table” thanks to the increased protection of the employee – said the representative of the Ministry of Finance.
Tax sealing package – VAT
The activities that tighten the tax system include also solutions that already exist or are possibly already being introduced. – On July 1, the e-commerce package entered into force, which will allow VAT to be sealed in the field of tax collection on parcels from third countries. Another project is e-invoice, which will speed up analytics and ensure more effective VAT collection. It brings many benefits to entrepreneurs, such as shortening the VAT refund period from 60 to 40 days. This is a key VAT sealing project for us – said Paweł Selera, director of the VAT department at the Ministry of Finance.
Another project that has already been announced is the so-called cashless taxpayer, i.e. a solution that will reward taxpayers accepting non-cash payments.
– A taxpayer who uses the online cash register and accepts non-cash payments and sells his goods and services to consumers will be able to count on a VAT refund in 15 days, in addition in a fully automated manner. If you tick the appropriate box in SAF-T, the tax administration will check whether it is a retailer and whether the level of sales in non-cash payments is sufficiently high, and then refund the VAT – said director Selera.
The ministry wants as many taxpayers as possible to use online cash registers, including virtual cash registers. – Currently, we already have over 600,000 online cash registers and almost 3,000 virtual cash registers. More taxpayers enter the online cash register system, from January 1, 2022 they will be sellers selling under the tax free system. This allows fighting the shadow economy, which is an important element of the VAT gap, said Selera.
Main photo source: concrete24