ZPP Newsletter
Warsaw, 20th November 2020
Position of the Union of Entrepreneurs and Employers on the draft amendment to the VAT act implementing the package of e-commerce VAT directives
The Union of Entrepreneurs and Employers has been drawing public attention to the problem of unequal conditions of competition between e-commerce platforms operating in Poland for a long time. In light of the increasing significance of online trade resulting from general trends and additionally reinforced by the coronavirus pandemic, the gap between the operating conditions of Polish and Chinese platforms is becoming ever more evident. Both the extensive export subsidisation system and unfair practices applied regularly by Asian platforms (underestimating the declared value of shipments, marking shipments as “gifts”, and ultimately marking parcel shipments as letters) enable them to offer goods at very low prices. At the same time, consumers purchasing goods through them are in practice unprotected. Thus, both domestic platforms and consumers lose out on the present situation. Moreover, the State Treasury is also at a loss of revenue – according to available estimates, unfair practices applied by Asian platforms generate a budget loss of PLN 2 billion annually.
One of the goals of the package of directives being implemented, and therefore also of the draft act under review, is to eliminate abuses in the field of circumventing the VAT collection system by platforms outside the European Union. This goal should be assessed generally positively. At the same time, we would like to emphasise that it is only a fragment of a wider regulatory landscape that results in the lack of equal operational conditions on the e-commerce market. It is at least equally urgent to introduce solutions for the collection of due duties or the enforcement of consumer regulations. Therefore, the presented draft act ought to be perceived as one of the first steps in the process of levelling the conditions of competition – this task has certainly not been completed yet.
By the same token, we draw attention to the fact that some of the solutions proposed in the reviewed draft actually constitute additional burdens for national platforms – detailed comments presented below.
The first example of unnecessary over-regulation envisaged by the legislator is the introduction of the obligation for e-commerce platforms to issue sales invoices for goods sold to consumers. It should be underlined that this is a proposal that goes beyond the scope of the regulations provided for in the e-commerce VAT package. The directives provide for the invoicing obligation for intermediary platforms, an obligation limited to certain B2B transactions and transactions concluded with consumers provided the platform is not registered in the European Community’s VAT system – One Stop Shop. The directives only provide for the possibility of extending this obligation by member states – the Polish legislator decided to make use of this option. In our opinion, this is an erroneous approach. According to the EU+0 rule, which is one of the basic postulates of the Union of Entrepreneurs and Employers, all kinds of requirements and restrictions resulting from the provisions of EU directives should be implemented into the Polish legal system in a formula not exceeding the minimum established therein. In other words, the implementation of directives should not be more aggravating for entrepreneurs than the minimum possible.
The proposed provisions clearly fail to meet this objective. Moreover, they can lead to a number of practical problems. We fear that consumers – seeing an invoice issued by an e-commerce platform – may incorrectly assume that the platform is the actual seller. The mechanism of legal fiction, which the legislator mentions in the explanatory memorandum, may turn out to be incomprehensible to a large part of consumers who, seeing the address and name of the platform on the sales invoice, may start directing possible claims to this platform, and not to the actual seller of the goods. Additionally, the introduction of this type of new requirement based on the aforementioned legal fiction will require the platforms to create new technological solutions from scratch, which – in the light of the deadline for transposition of directives – may prove challenging to implement on such short notice.
Furthermore, we would like to draw attention to the need to address the issue of fiscalisation of sales, in the case of which platforms would become a taxpayer on the basis of the project due to transactions carried out by third parties. We believe that this type of sales should be completely exempt from the fiscalisation obligation. This is particularly important as these transactions will not fall within the scope of the mail order exemption currently in force. Therefore, the lack of adequate regulations will cause significant technical problems, which will put an additional burden on the platforms. From the point of view of the platform’s status as a VAT taxpayer, it is also important to be able to withdraw the tax amount resulting from the transaction from suppliers’ accounts. One should keep in mind that, as a rule, the entire payment for the transaction is transferred to the account (or virtual account) of the underlying provider. Thus, the VAT amount is not transferred to the account of the platform that is to become the taxpayer of this tax. If the option described by us is therefore not provided for in the regulations, the neutral (as a rule) VAT will become the actual cost of business for e-commerce platforms.
We have also identified the moment when the VAT amount is to be shown to the buyer as an important area. The contents of the explanatory memorandum suggest that the VAT amount (in the case of goods subject to e-commerce VAT) should be shown before the payment is made. Meanwhile, in practice, the possibility of classifying a given transaction as subject to VAT (or not) will appear only at the stage of making the purchase, at the moment when the buyer provides data relevant to its status. Consequently, we believe that it is sufficient from the point of view of securing the interests of the consumer (for whom – ultimately – the key parameter is the gross price of the goods, and not their individual components) to be able to inform about the amount of VAT at the very end of the ordering process subject to e-commerce VAT.
To sum up, the Union of Entrepreneurs and Employers calls for active measures to ensure equal conditions of competition between Polish and Asian e-commerce platforms, at the same time appealing for further work on the project, taking into account the detailed comments presented above.
Fot. StockSnap/pixabay.com
