Polish Finance Ministry targets VAT scams

The Polish Finance Ministry presented the draft of an amendment to the law on VAT tax that widens the list of goods subject to reversed-charged VAT tax.

”Following the confirmation that there indeed exist VAT irregularities it is primordial to extend the [reversed-charged VAT tax] mechanism to include more goods,” the ministry wrote in its statement at the end of June.

The ministry’s plans were generally met with enthusiasm by Polish businessmen.

The reversed-charged VAT is a system whereby the obligation to pay the VAT tax is imposed on the receiver of the goods or services rather than on the provider. This prohibits direct transfers of money between companies and thus contributes to lower the risk of a VAT scam.

The reversed-charged VAT system is already in use in a number of sectors of the Polish industry, such as scrap metal, steel and some copper-based products. Since the beginning of 2015, the scope of sectors with reverse charge system will be broadened to include mobile phones and gold.

The draft of the amendment comes in a response to a postulate made by the mobile phones industry in March 2014 to include mobiles in the reversed-charged VAT system. Industry players estimated that mobile phones-related VAT scams in 2013 reached as much as PLN 2 bln.