Will VAT frauds strike back?
Changes proposed by the Polish Ministry of Finance (MF) could create another loophole for VAT frauds, Polish business daily Puls Biznesu said.
“We are very worried about the ministry’s proposition. Once again we are opening a gate for criminals,”
the President of the Polish Steel Association (Hutnicza Izba Przemysłowo-Handlowa), Stefan Dzienniak, said.
In September 2013 with the acceptance of the EU, Poland introduced a reverse charge for some of the products in order to fight VAT fraud. The reverse charge mechanism moves a TAX obligation from the seller to a buyer.
In the newest project of the VAT law amendment, Polish MF proposed that reverse charge should be used only in transactions higher than PLN 20,000 net.
According to representatives of steel industry this will recreate an environment for VAT schemes.
The steel industry is particularly afraid of a return of large-scale VAT scams as national steel providers slowly managed to regain a part of the grey-sphere market last year.
Reportedly in 2013, due to illegal VAT practices, they controlled only 11 percent of the market. After implementation of the reverse charge they managed to increase their share in the market to 34 percent, Puls Biznesu said.
Poland has been struggling with VAT scammers for years. According to a PwC report, a gap in the Polish VAT system reached PLN 36 billion in 2012, more than country’s deficit.