The National Tax Administration can effectively paralyse any business

The National Tax Administration, tasked with closing the tax gap in the state budget, was launched at the beginning of March. The new customs and tax administration has been given wide-ranging powers that are causing concern among businesses and economic experts.

The new customs and revenue service will be able to inspect entrepreneurs without notice, whether in a company or a private residence. The inspectors can demand the disclosure of all company documents, even those covered by trade secrets. Deputy Prime Minister Mateusz Morawiecki, inaugurating the new service, made no secret of the fact that it is supposed to efficiently secure public finances. He likened KAS officers to a sabre to take back what foreign violence (i.e. economic criminals) has taken.

An effective rather than an efficient state?

Waldemar Pawlak, former Prime Minister and Minister of the Economy, draws attention to one of the three main objectives that the Law and Justice government has included in the Strategy for Responsible Development, namely an 'efficient state'.

The former Prime Minister adds that he knows of a case where the office was so successful in controlling entrepreneurs that all business activity in his area froze, and finally the office itself was abolished.

Trouble with VAT refunds

All indications are that these fears are not unfounded. At the beginning of April, a bankruptcy petition was filed by MGM SA, which has lost liquidity despite the profits it has been steadily making. Last year, the tax office blocked about PLN 24 million and withheld VAT refunds of about PLN 9 million. A court ruling suspending the blocking of MGM's funds did not help.

Lawyers from the law firm PMR Restrukturyzacje SA admit that it is common to encounter situations in which entrepreneurs lose liquidity as a result of inspections by the tax authorities. In many cases, this threatens and often even leads to insolvency.

The initiation of audits against entrepreneurs to determine whether they have correctly accounted for VAT is often associated with the withholding of refunds of excess tax paid by the business owner. The businessman then remains in limbo until the proceedings are concluded, which affects the health of his business and its profitability in the following months.

The material appeared on ceo.com.co.uk:

18 April 2017:
" National Tax Administration can effectively paralyse any business