Battle over VAT collection gap can also hit honest companies

The data show that the VAT gap in Poland is gradually narrowing, but honest business often backfires in the fight to seal the system. One of the high-profile cases is the case of the Marketing company from Gliwice, whose tax office has been withholding VAT refunds for the amount of nearly PLN 17 million for two years, although the subsequent proceedings did not reveal any irregularities. As a result, the company began to have liquidity problems and had to suspend operations, and at the moment it is already on the verge of bankruptcy. Similar cases quite often go to the Ombudsman for Small and Medium Enterprises.

The VAT gap is the difference between the amount of expected VAT revenues to the state budget and the actually collected tax amount. Among others, as a result of fraud and tax evasion (e.g. as part of the so-called VAT carousels) or administrative errors. In recent years, the Ministry of Finance has introduced a number of solutions aimed at closing this gap. According to the March report of the CRIDO consulting company, its gradual decline has been observed in Poland for several years (from 27.1% in 2011 to 8.7% in 2019). The data published by the Chancellery of the Prime Minister show that in 2015–2019 it was possible to reduce it by half (from 24.2 to 12%).

Sealing the VAT gap was one of the flagship goals of the current government, which had, among others, enable the implementation of social programs. However, government and economists are divided on how far this goal is being met. The latter also point out that honest taxpayers often suffer from a backlash in the fight against VAT fraud.

One of the high-profile media cases is the case of the Marketing company from Gliwice, which deals with the trade and re-export of cars: it buys new vehicles available on the Polish market and resells them abroad. This business model is known and common in many countries. For two years, the tax office has been withholding the company’s VAT refund for January and February 2019 for the amount of nearly PLN 17 million, although the subsequent proceedings did not reveal any irregularities. The company also did not apply for a refund of the VAT surplus for March 2019 in the amount of almost PLN 8 million, which means that the amount frozen by the treasury is about PLN 25 million. As a result, problems with financial liquidity began, which meant the necessity to suspend operations. At the moment, Marketing sp. J. Is on the verge of bankruptcy.

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