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The Warsaw Voice » Other » October 10, 2002
Taxes
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VAT
October 10, 2002   
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She new regulations exclusively apply to small businesses. For the needs of the amendment, the term "small taxpayer" was defined. For the tax office, this means a taxpayer whose sales did not exceed the equivalent of 800,000 euros (zl.3.24 million) in the previous tax year.

The VAT amendment, in effect since Oct. 1, gives small businesses a big break in settlements with tax authorities. This is yet another "gift" for taxpayers linked with the government program "Enterprise in the First Place."

Until now, the main headache for both small and other businesses was that the VAT had to be calculated on the day of invoice distribution and that it had to be settled every month. As a result of the increasingly frequent payment bottlenecks in Poland, the company had to calculate and transfer tax, even though it did not yet receive the money for the goods or services sold.

Under the amendment, small taxpayers can choose the so-called cash basis of VAT accounting. This is chiefly based on the fact that the taxpayer calculates and pays tax only after they receive the money for the goods or services. However, such a shift in the deadline for paying VAT cannot be longer than 90 days from the date of issuing the goods or performing the services in question. Moreover, the taxpayer makes settlements with the tax office once per quarter instead of once per month.

However, experts warn that taxpayers should be cautious when choosing the cash basis of accounting. This is because the same rules apply to deducting VAT levied. And some taxpayers may thus fall into a financial liquidity trap. If they have a large amount of VAT to deduct, and they make settlements on a quarterly basis, with the deduction possible only once every three months, this will substantially delay the refunding of the money. Despite this, many small businesses will certainly take advantage of the opportunities offered by the amendment.

"Previously, some of our clients were helpless, and we were also helpless," said the head of an accounting office specializing in services for small businesses. "Sometimes VAT exceeded the actual profits of the company for the month, and the tax had to be paid. Extending the deadline for paying VAT will certainly protect many taxpayers from situations in which they have to borrow money to pay the VAT levied two to three months later. However, few taxpayers learned about the new opportunities on time and can thus start the new method of settlements no earlier than the first quarter of 2003. Fortunately, we managed to inform our clients about these solutions in time."
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