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New tax package – fair, effective and sustainable taxation

Pursuant with the outbreak of the pandemic, in many countries support projects for entrepreneurs affected by the current situation have been presented. In Poland, there are also such solutions under the so-called Anti-Crisis Shield. The possibility of deferring the tax, using subsidies or other forms of support are just some of the proposed solutions to help entrepreneurs fight the current situation on the economic market. But not only in Poland entrepreneurs need help and support. Recently, the need for help was also noticed by the European Union, which presented a new tax package to rebuild the European economy. On July 15, 2020, the European Commission presented a specific action plan on taxation for the years to come. The proposed tax package aims to rebuild the economy and bring it to economic growth. A top priority is fair and simple taxation in order to protect public revenues that will allow the economy to recover at this time. In addition, it should be noted that under the two slogans “fair” and “simple” there are many changes and initiatives that were presented by the European Commission.

In connection with the presented new tax package, activities are planned in the following areas:

1.Tax changes – this is a set of 25 initiatives that the European Commission plans to implement by 2024. In addition to simplifying the tax system, the aim is also to support honest entrepreneurs and reduce tax obstacles and reduce the administrative burden for entrepreneurs in the single market. The planned changes also take into account the current digitization. New technologies are to be used to effectively combat tax fraud. According to the presented action plan, the changes introduced are aimed at:

  • simplification of taxes to make regulations more transparent,
  • reducing the administrative burden for entrepreneurs, e.g. when registering NIP and VAT, payments or other tax-related activities, in particular when it concerns taxpayers who want to start a job or set up a business in another Member State – the procedure should be simpler and more efficient to was not too many formalities,
  • adjusting the tax administration to changing realities (digitization) and more effective fight against tax fraud and tax avoidance,
  • helping European Union countries to enforce the existing tax regulations, as ensuring safe tax revenues will enable entrepreneurs to be supported in such difficult times,
  • promotion of taxpayers’ rights and increasing their legal awareness,
  • changes may also apply to goods such as tobacco products – improvement of the provisions on excise goods,

2.Proposal on Administrative Cooperation (DAC7) – The European Commission has proposed a revision of the Directive on Administrative Cooperation to extend EU rules on tax transparency on the digital platform. This change is to cover entities that sell goods or provide services via the digital platform. Automatic exchange of information about generated income by sellers will allow determining the amount to be paid tax, but also reduce the administrative burden placed on digital platforms.

3.Press release on good tax governance in the European Union and beyond – the aim is to promote a fair and transparent taxation system and to combat unfair competition not only in the European market but also worldwide. The proposal is to reform the code of conduct to counter tax competitiveness and tax harmfulness and to improve the EU list of non-cooperative jurisdictions.

Additionally, it should be noted that in addition to the proposed changes to simplify and fair taxation, an important issue is also achieving the European Green Deal, i.e. achieving climate neutrality by 2050. Therefore, the funds obtained, apart from investments and for further economic development, will also be allocated to innovations and ecological solutions.

The changes presented are intended to support honest entrepreneurs and facilitate by reducing the administrative burden. In addition, more efficient public revenue collection and an effective fight against tax fraud could boost Europe’s economy. However, whether these changes will actually benefit entrepreneurs will not be revealed until some time, but it is known that you should be prepared for further changes in taxes.

According to the European Commission, the presented action plans met with the approval of the Polish government. Creating a market where companies can trade and invest across Europe offers great opportunities for the economy, but also poses risks. In particular, tax havens pose a significant threat, and the lack of border controls may result in the fact that distributed profits between countries are not taxed. As deputy finance minister Jan Sarnowski points out, “Poland was the first country in the European Union to limit the possibility of using “Anti-COVID aid” in the case of enterprises associated with tax havens” – there are cases of failure to assist to entrepreneurs whose beneficial owner has a tax residence in a tax haven. It also drew attention to the significant VAT gap in the European Union, which is almost EUR 140 billion, and a number of work to be done in the field of this tax. Additionally, it should be noted that European countries differ in terms of the effectiveness and technological advancement of tax administrations. However, despite many differences and the work that must be put in to achieve the goals, Poland wants to share its knowledge and increase the effectiveness of its activities.