Income from the tax on goods and services is the key source of public income in Poland. From 2011 to 2013, the VAT income made up 42 percent of the state budget income on average. In the same period the VAT income went down by more than 6 percent, or by PLN 7.4 billion. In 2011, the amounts of VAT reductions disclosed by the bodies reporting to the Minister of Finance totalled a bit more than PLN 2.5 billion, whereas in 2012 that amount exceeded PLN 4 billion, and only in the first half of 2013 it was nearly PLN 3.2 billion. Intensification of tax frauds was one of the reasons.
Tax frauds generate significant losses for the State Treasury. They include Polish buyers’ failure to pay VAT on goods imported from other EU countries, use of invoices documenting fictitious business transactions or tax swindles by way of VAT returns. In line with the data provided by the Ministry of the Interior, in 2012 only in cases concerning the so-called fuel crimes that ended in indictment, tax frauds cost the state more than PLN 1.3 billion.
NIK revealed that the Polish administration took great efforts in the audited period to limit the scale of tax frauds. Cooperation between Poland and the EU member states on the fight against VAT tax frauds improved, also within the Eurofisc network (a network to streamline information exchange among the EU member states to facilitate multilateral cooperation on the fight against frauds related to the tax on goods and services). NIK has underlined that smooth and comprehensive exchange of information among member states is a vital element of effective combat against VAT frauds.
The Minister of Finance analysed threats related to the occurrence of VAT frauds. He properly set goals and directions of the tax control, indicated high risk areas, such as fuel, steel or scrap trading markets. As a result of numerous audits in those areas VAT deficits were detected. In order to minimise the scale of tax frauds the Minister of Finance prepared draft changes to the VAT Act and the Tax Ordinance (the key ones were related to reverse charge and solidary liability). The amendment came into force on 1 October 2013.
