Thursday , June 30 2022

23-percent. VAT remains with us longer. Tax deduction can be in a few years –


Higher tax rates in goods and services – 23 percent and 8 percent, respectively. – for the first time in 2011 introduced the PO-PSL government. The next cabinets brought the assumption of a temporary increase every two years. Now the Ministry of Finance wants to break with a makeshift. Instead, it recommends a strict, legal registration of the conditions, after which the VAT rate will automatically return to its core values ​​- 22 percent and 7 percent (Formally, still how much). However, there is no reason to expect the decline to take place quickly.

According to the ministry project, return to lower rates will not depend directly on the decision of the politicians but on the public finance deficit and debt level. As long as the two conditions are met, increasing rates will be applied. First: The public debt, which is reduced by the value of the cash in the accounts of the MF, will remain above 43%, for example, from the bond sale. GDP, according to the Ministry of Finance, accounted for 47.7% of GDP in the past year, reaching 45.9% of GDP this year.

Second condition: The gap between the deficit of the public finance sector and the target targeted by Poland will be higher than 6 points. GDP. The target is an open 1 percent. GDP and the said difference are cumulative values ​​calculated in the public finance terminology since 2015, this is called a sum sum. This provisional result stems from the fact that 2015 was the first year in which the rule determining the public expenditure limit was in force and that the control sum was the only important element. A sufficiently large checksum criterion was met: in 2017 it was 6.28%. GDP. And this is enough to keep the rates of 23 and 8 percent.

Returning to lower VAT is difficult, but not impossible. If we believe in the ministry estimates, this year the control total will drop below 6 percent. GDP. However, public debt will be reduced to the required level in just three years.

Discount can be in the next duty period.

The Ministry of Finance will issue a draft amendment to the VAT Law today. The implementation of incremental ratios with a precisely defined mechanism will replace the current artan temporary Kesin. The amount of the ratios will depend on the size of the debt and the deficit of the public finance sector. The ministry had to face the issue, because at the end of this year, the last two years have expired in 2011 to implement the increase implemented by the PO-PSL government for the first time. If the Ministry did not prepare this amendment, it would return to the tax base rates as of 1 January 2019. This is 22 percent. The basic ratio and decreased by 7 percent.

The continuation of the increase in the state's writing (after September positively over 3 billion PLNs) does not change the fact that the decline in rates would mean a significant loss in VAT revenues. It's about 7 billion PLN. This year, the results of the public finances will be very good (0.3 percent of the GDP deficit according to the International Monetary Fund). Next year, due to weakening economic growth, it will be difficult to repeat. And the drop in VAT revenues will be an additional blow that the MF cannot afford.

The resort was looking for an indirect exit. The fixed rates will not change to fixed rates (officially the base rates are still 22 percent and 7 percent), but at the same time they will not allow you to return the issue within a few years. As a rule, there must be a mechanism closely linked to a rule that sets the public expenditure limit each year. By default, the ministry is increasing according to GDP in the last six years (plus two more) and for the inflation target of the National Bank of Poland (2.5%), taking the previous year's expenditure. If the financial deficit is too high or the debt is too high, the limit should be set. The Law on Public Finance clearly defines the amount of these regulations. The first 1.5 percent. The expenditure limit is realized if the public debt exceeds 43% by reducing the amount of free resources provided to the Ministry of Finance. GDP, or – and this is the second proposition – the budget is too high for the government to target it in preparing the budget. The goal is to keep the deficit at 1 percent. GDP. The correction is made in cases where the cumulative difference between the actual open and the goal-to-total sum is greater than 6 points from the year 2015 (ie from the year the rule was first applied). GDP.

Decreasing the VAT rate will lead to spending cuts

Ministry officials recommend that VAT rates should be reduced if the spending limit does not need to be adjusted. So, when the debt and budget falls to low enough levels.

– Our goal is that the return to discounted VAT rates does not include significant spending cuts. The spending rule works in such a way that the extraordinary change in income resulting from the decrease in the VAT rate leads to a reduction in expenditures. Therefore, a good financial situation will allow for an increase in the level of expenditure of PLN 12 billion, when the corrective mechanism in the expenditure rule does not function as determined by a high deficit or debt. Leszek Skiba, Deputy Finance Minister, is the amount that can be used to finance the VAT reduction.

For now, the corrections to be made by free funds in 2017 are 47.7%. The ministry estimates GDP and "total control" as 6.28 points. GDP.

The dependence of VAT on a lower return on the size of the deficit and the debt means that Poland will implement increasing rates for at least five years. The length of this time can be estimated based on the current MF estimates. As a rationale for the drafting of the next year's budget, the ministry envisions that the amount of debt taken into account in the VAT determination mechanism is above the required value – that is, to be above 43%. GDP – up to 2021. And this year is already sufficient to use the increasing rates, although the total of the check falls below 6 points. GDP record low open due to 2018

Criteria allow 23 percent and 8 percent for departure. VAT will be covered in 2021, but this does not mean that the tax will automatically decrease. According to the draft, this will take place with a two-year shift due to the publication dates of the data by the Central Statistical Office. The actual debt for 2021 will not be known until the end of 2022, which means that the basic rate of 22% will be recovered. and 7 percent. It could only have taken place since 2023.

The draft, published today, does not include another important solution that the market expects – the VAT matrix. This is a new assignment of individual goods and services to tax rates. The system based on the Polish Classification of Goods and Services used by the Central Office of Statistics today brings many misunderstandings, and the taxpayers do not always know which rate to apply. For VAT purposes, therefore, PKWiU should be replaced by the CN classification used in international trade. The new matrix is ​​to be neutral for the budget.

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