Due to high inflation in Poland, the Polish government decided to decrease the VAT rate for basic foods from 5% to 0%.
As of 1 February 2022, a VAT rate of zero has been in force for basic food such as meat and fish, dairy produce, fruits and vegetables, and bakery produce.
All products covered by the 0% VAT rate are described more precisely in points 1-18 of attachment 10 to the VAT Bill.
These changes do not concern foods taxed at 8% or 23%, for example other fruits, drinks and seafoods.
Retailers and their accountants do not know whether the lower rates apply only to retail or wholesale. And what about restaurants? People are asking these questions.
Polish tax advisors say that the lower VAT rate must be applied to each step of the supply chain. This means that zero VAT shall be used by producers, wholesalers and shops.
Specialists note that, for B2B transactions, it will trigger an obligation to introduce systems changes and additional verification of documents. The impact on the VAT position in the chain supply will remain neutral for those entities, they say.
The lower VAT rate cannot be used by restaurants, which are generally excluded from applying 5% VAT, therefore the 0% VAT rate does not apply to them either.
Additional requirements which must be met by enterprises are related with cash registers. These need to be recalibrated for the VAT cut. This affects online cash registers as well as traditional, paper recording machines.
Problems may also arise for these enterprises which do not sell products to consumers but which undertake only B2B business. They are also obliged to adjust VAT rates in their accounting systems.
Last but not least, retailers are obliged inform their consumers about the VAT rate cut by showing information about which goods are taxed at the 0% VAT rate.
These changes will be in force until 31 July 2022, but it cannot be excluded that they may be extended, taking into account inflation.