President confirms SLIM VAT 3 compliance reforms for 1 July 2023
Following the March second delay of the Polish SLIM VAT 3 compliance reforms, the implementation date has been confirmed as 1 July 2023. On 1 June 2023, the Polish President signed into law the package of measures.
The Polish government had first delayed the introduction of SLIM VAT 3, over 20 reforms to its VAT regime, from 1 January to 1 April 2023. The reform includes raising the VAT registration threshold, harmonising rules with the EU VAT Directive, a sugary drinks tax and settling other taxes against VAT credits.
The previous reforms, SLIM VAT 2 and SLIM VAT 1 where launched at the start of 2022 and 2021, respectively. SLIM VAT 1 focused on exchange rates, VAT deductions and advance settlements. SLIM VAT 2 included split payments and invoice simplifications.
The Ministry of Finance announced SLIM VAT 4, the latest round of compliance reforms for 2024.
SLIM VAT 3
There are over twenty reforms pencilled in for SLIM VAT 3. The package covers seven areas:
- VAT liquidity, and easing split payment funds use rules
- More VAT exemptions
- Reducing complex correction requirements, including FX where changes on a correcting invoice
- Simpler invoicing rules, including on advance payments invoice rules and deductions on intra-community supplies
- Reduce penalties and sanctions on voluntary disclosures and post-audit adjustments
- Clearer VAT binding rulings and certainty
- 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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