The "tax on products and services" (the Polish name for VAT) was introduced in Poland with effect from 5 July 1993, replacing Turnover Tax. VAT is charged on sales and supplies of goods and services by registered businesses in Poland, and on the import and export of goods and services into Poland.
VAT was designed as a tax on consumer expenditure, rather than being a tax to be borne by businesses. Businesses are entitled to deduct the VAT they have suffered on inputs ('input tax') from the VAT which they have charged their customers ('output tax'). The net amount of VAT is paid by the seller of the goods or services to the taxation office. Should the input tax exceed the output tax, the business is entitled to carry forward the excess for set off against its VAT liability in succeeding periods. In certain circumstances the excess is refunded to the business by the taxation office.
A VAT liability must be paid on or before submitting the monthly VAT declaration to the taxation office. The latest date for doing so is twenty five days after the end of the month in which the VAT liability arose.
VAT is calculated on the basis of the sales price of goods or services, reduced by discounts. In case of imports of goods the VAT tax base is modified, being the customs value of the goods increased by customs duty, import tax and excise tax.
There are three distinct rates of VAT: 22%, 7% and 0%. The general rate of VAT imposed is 22%.
The 7% rate is applied, principally, to the sale of fertilisers, fodder and machines for the agricultural and forestry sectors, appliances for health care, processed food articles, newspapers, maps, musical scores, children's articles, communal services, coal, gas and energy, certain construction materials, transportation, radio and telecommunications, and tourism and leisure services.
The 0% rate of VAT is applicable to exported goods and services and certain other specialised services; mostly transport related.
In addition, Ministerial decrees provide specific exemptions from VAT for certain goods and services, including:
- products of the meat, fish and poultry industries;
- services rendered relating to the following sectors: post, housing, education, culture, arts, health care, research and development, sports and agriculture;
- banking and stockbroking services
Businesses with total annual sales for the preceding fiscal year of less than 80,000 zlotys (800 million old zlotys) are not required to register for VAT unless their sales for the particular year exceed 80,000 zlotys, at which point they must charge VAT.
Businesses which are not obliged to register for and charge VAT may still elect to do so should they so desire.
Businesses with total annual sales for the preceding fiscal year of at least 80,000 zlotys (800 million old zlotys) of non-exempt goods and services are required to register for and charge VAT.
Application for VAT registration must be lodged with the taxation office prior to when the business first supplies goods or services.
A liability for VAT arises at the moment a sale invoice is issued. In the absence of an invoice, a VAT liability arises seven days after the goods are delivered or the services are rendered. In case of imports, where goods are supplied without an invoice ensuing a VAT liability arises once the goods have cleared customs.
Excise Tax
In conjunction with the implementation of VAT, Poland introduced a special excise tax, having effect from 5 July 1993.
As is the case with VAT, the excise tax is imposed at the manufacturing or import stage. The tax is calculated as either a percentage of the manufacturing sales price of the goods or as a percentage of the customs value of the goods sold.
The excise tax is imposed on selected goods, including the following: alcoholic beverages, tobacco products, engine oils and fuels, cars, sailing and motor yachts, certain electronic equipment, perfumes and production and import of plastic wrappings.
Where goods are purchased on which the excise tax is levied, the purchaser is required to take the excise tax into account in calculating any liability to VAT.
Tax laws and practise are constantly being revised and, whilst every effort is made to ensure that the information in this tax newsletter is accurate and timely, no decision should be taken on the basis of the information herein without first consulting with KPMG Polska.
Should you have any questions in relation to the above issues, please contact:
Oliver Sinton
KPMG Polska
LIM Center - Marriott Hotel - IX floor
Al. Jerozolimskie 65/79
00-697 Warsaw, Poland
Tel: +48 (22) 630 7236
Fax: +48 (22) 8300 796
This information was correct as of 8 November 1996.
