Welcome Note of Ondřej Peterka

In the year 2000, my partners and I launched the PETERKA & PARTNERS law firm in Prague, Czech Republic. Over time we developed an ambitious idea - to create an integrated regional law firm, which at first seemed almost impossible. However, after years of dedication and hard work, we became a strong alternative to the global giants and local law firms active in the CEE region through their networks or best friends.

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Tax settlements during the COVID-19 pandemic period

On 8 April 2020, Filip Smakowski, counsel at PETERKA & PARTNERS Poland took part in a videoconference, with Ministry of Finance (“MF”) representatives, devoted to International Group of Chambers of Commerce (“IGCC”) proposals in regards to the Anti-Crisis Shield. During the meeting, proposals related to i.a tax settlements during the COVID-19 pandemic period and the possibility of their implementation in relation to the current budgetary situation were discussed. Below, we present a brief summary of the meeting.

1. Proposals on which the MF is currently working:

  • [PIT] a decree suspending the accrual of interest on tax arrears resulting from the submission of the PIT return after the due date (30 April) until 31 May 2020;
  • [WHT] a new decree further deferring the WHT “pay and refund mechanism” for payments over PLN 2 million (Article 26(2e) CIT Act, Article 41(12) PIT Act) (currently deferred until 30 June 2020);
  • [WHT] facilitating certificates of residence of foreign taxpayers as regards extensions of their validity or the possibility of submitting copies;
  • [WHT] amendment of rules that were introduced from 1 January 2019 is still planned but the MF did not give details on when the amendment can be expected;
  • [Sugar tax] deferral of entry into force by the end of the year;
  • [VAT] abolition of the obligation to hold receipt confirmation in order to recognize invoice adjustment;
  • [VAT] further postponement (currently until 1 July 2020) of the entry into force of the rules on online cash registers.

2. Proposals on which the MF is open to further analysis/discussions:

  • [ORD] preparation of tax explanations concerning specific problematic issues with respect to regulations introduced by the Anti-Crisis Shield and explanations of existing tax provisions – the issue of due diligence for the purposes of WHT or the definition of genuine business activity/or effective place of management or merchant due diligence have been emphasized in particular;
  • [CIT] amendments with respect to limitation of tax deductibility of debt financing costs (Article 15c CIT Act) and costs of intangible services (Article 15e CIT Act);
  • [CIT] the possibility of changing depreciation methods during the year, as well as a change in the amount of individual rates during the year;
  • [CIT] the possibility of setting up a tax group during the year or settling taxes within a capital group (“ad hoc tax group”);
  • [CIT] temporary suspension of the restrictions resulting from the allocation of revenues and costs to operating and financial revenues/ costs during the COVID-19 crisis period;
  • [CIT] liberalization of the deadline for bad debt relief for the creditor (earlier adjustment of the tax base by not received payments);
  • [VAT] deferral of the obligation to collect documentation in the case of intra-community supply;
  • [VAT] in the case of the provision of services free of charge for COVID-19-crisis purposes, the MF accepted that such services could be considered as connected with business activity (but did not declare whether this would be formally confirmed, for example, by means of explanations or general interpretation);
  • [VAT] further postponement of the entry into force of the VAT rate matrix and new SAF-T rules (but this issue is highly debatable).

3. Proposals which the MF is unlikely to accept, or on which there have been no clear declarations from the MF:

  • [VAT/CIT] MF representatives have indicated that it is currently not possible to postpone automatically VAT payments or CIT advances (an entrepreneur can only apply for such a postponement individually) and it is not possible to postpone submitting VAT returns;
  • [VAT] no faster VAT refund (15 days instead of 60), or no faster or automatic payment of funds from VAT accounts – however MF representatives indicated that tax authorities have received guidelines to make refunds proceed as quickly as possible;
  • [VAT] potential changes in the recognition of intra-community purchase/import of services in MF assessment depend on the judgment of the CJEU;
  • [VAT] mandatory split payment will not be abolished;
  • [VAT] no possibility to change to cash method for the settlement of output VAT;
  • [VAT] no possibility to accelerate the application of bad debt relief;
  • [VAT] in the case of supply of goods free of charge for COVID-19 crisis purposes – the MF stated that the lack of VAT collection could raise doubts and risks from the point of view of the tax system's rigidity.

For any legal matters arising in these special circumstances, please do not hesitate to contact our COVID-19 Help desk at covidhelpdesk@peterkapartners.com.

 

 

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