Anti-Inflation Shield 2.0. - reduction in VAT rates
A time-bound reduction in VAT rates on primary food products as well as fertilisers and fuels is provided for in the Act of January 13, 2022 amending the Act on Goods and Services Tax (Anti-Inflation Shield 2.0.). The principal intention of the amendments implemented by the Act is to suppress rising inflation. The law provides for a temporary reduction in VAT rates on food, artificial fertilisers, natural gas, electricity and heat as well as fuels. The reduced rates are to be in force from February 1 to July 31, 2022.
Rate reduction
Goods and services tax (VAT) on food and beverages previously subject to a 5% rate is now 0%. The list of products covered by this amendment comprises, among other things, bread, meat, fish, dairy products, eggs, vegetables, fruit, nuts, cereals and various kinds of processed food.
The tax on motor fuels such as unleaded petrol, diesel or natural gas has been reduced from 23% to 8%.
Likewise, the VAT rate on fertilisers, plant protection products, horticultural soil and other agricultural inputs has been reduced - in this case the VAT rate dropped from 8% to 0%.
The Anti-Inflation Shield 2.0. extends the application of 5% VAT rate on electric energy until July 31, 2022 (under Shield 1.0. the reduced rate was to apply until March 31, 2022).
On the other hand, the rates on natural gas, thermal energy were further reduced in relation to Shield 1.0. –from 8% to 0% and from 8% to 5% respectively. Similarly to the other changes under Shield 2.0., the reduced rates on natural gas and heating will be binding until July 31, 2022.
Anti-Inflation Shield vs. Binding VAT Rate Statement
As a consequence of reduced VAT rates, the Binding Rate Statements (BRI) concerning the goods covered by the reduced rates expire. According to the regulations, a BRI is in force for five years from the date of issuance of the decision. Nevertheless, they will expire in the event of changes in tax regulations regarding the rates to which a given BRI relates.
Therefore, it must be concluded that due to the changes, the protection in the form of a BRI formally expires. However, it should be mentioned that the change in VAT rates will not have an impact on the classification of the goods covered by a BRI in accordance with the Combined Nomenclature. It will remain valid on condition that the description, composition, nature and use of these goods do not change.
Taxpayers who wish to secure a BRI protection again will have to lodge an application with the National Revenue Information Service once again.
Kinga Duszna, Tax Consultant, ATA Tax Sp. z o.o.
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