NEW PUBLICATION: “VAT non-compliance in Poland under scrutiny”

Since 2009, despite constant growth in the tax base  and  only  slight  variations  in  effective  rates,  the  trend  in  VAT revenue in Poland has been reversed, and inflows have become less stable. The ongoing decline in VAT collection and the increase in the uncertainty related to the main component of budget revenues is a very important problem, which in the light of growing budget spending may threaten the stability of public finances.

CASE – Center for Social and Economic Research publishes a study on the issue of VAT non-compliance in Poland: “VAT non-compliance in Poland under scrutiny”. Three experts: Grzegorz Poniatowski, dr. Jarosław Neneman and Tomasz Michalik examine the structure and the causes of the VAT gap as well as the legal context and possible methods of improving VAT compliance at national and European level.

According to Grzegorz Poniatowski, “narrowing the gap requires time, and completely eliminating it is unrealistic, as part of the non-collection is ‘naturally occurring.’ The fight with the unregistered economy, fraud, avoidance and evasion is very difficult. As was shown by the results of CASE research carried out for the European Commission, in recent years none of the countries of the region has managed to significantly improve VAT collection.”

Dr. Jaroslaw Neneman, a former deputy minister of finance, indicates  a number of solutions, which would significantly improve the system of VAT collection in Poland. These include a reverse charge, divided payment, or the liquidation of quarterly settlements in favor of monthly ones. As dr. Neneman emphasizes, the fight against VAT criminality is possible by sealing of the system, but there is a need of a close cooperation between different services in the country.

Tomasz Michalik stresses that it is necessary to maintain a balance between ensuring a proper budget revenues and supporting standards of freedom across the EU. He underlines that the European Commission currently conducts a number of activities in order to combat tax crimes. One of the most important project concerns a taxation of Intra-Community Supplies.

The publication  “VAT non-compliance in Poland under scrutiny” is an extended version of the series of presentations given during the 142nd mBank-CASE Seminar under the same title.