PwC

Blickpunkt Osteuropa

VAT scams in Poland – do you know your business partner?


VAT non-compliance is currently a hot topic in the European Union. VAT Gap grows rapidly, and budget revenues from VAT remain unstable. Polish VAT gap was estimated and government bodies chose to take decisive steps to prevent its growth.

There are many actions that affect VAT compliance in Poland, but the most common method of defrauding public funds remains the so called “carousel fraud” or “the missing trader fraud”. In this type of scams it is important to remember that, unfortunately, such practice may also have negative consequences for businesses that are conducted with integrity.

Persons guilty of tax fraud frequently take advantage of the ignorance of honest entrepreneurs when committing tax frauds and expose even the most reputable companies on the market to enormous costs. Recently, tax authorities have been conducting an increased number of inspection proceedings aimed at detecting such frauds, emphasising how important is to review a business partner.

Introducing an effective business partners verification procedures is very important. Honest enterpriser should review its business partners from the perspective of whether transactions concluded with them could potentially be deemed dishonest by the tax authorities / tax inspection authorities responsible for inspecting the correctness of tax settlements. Such approach will be useful in case of a dispute with tax authorities

Polish Ministry of Finance and the Ministry of Justice, realizing the scale of the problem, decided to take more radical steps in the fight against criminals. Ongoing legislation process is now focused on strengthening penalties for tax fraud, introducing imprisonment even for 25 years (currently it is up to 5 years or 10 years in case of extraordinary restrictions). The proposed changes are intended to discourage criminals to engage in the VAT extortion practice.

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