Fun and games for all the family
Tax regulations can often drive you crazy - half require you to have a Ph.D. in law to understand them, while the rest are so straightforward that their literal interpretation gives rise to curious consequences.
Take foreign currency trading activities: if you receive, purchase, sell or dispose of foreign currency, the tax law requires that you convert the value of that foreign currency into złoty in order to ascertain the base amount for taxation purposes. Well, you might say, nothing strange or sinister in that. Indeed not. You might be forgiven for believing that the appropriate exchange rate to be utilised for the purposes of this calculation is the actual exchange rate at which you bought or sold. That however would be too easy. The tax law specifies that you must use the exchange rate "announced" by your bank on the date of the transaction.
This is where the fun can start. What if your bank publishes one rate in the morning and changes it in the afternoon? What if your bank is willing to negotiate a specific exchange rate for transactions over $10,000? What if you entered into a contract in advance of the transaction date to purchase or sell at a fixed specified rate of exchange?
Does this mean that if you sell at a rate higher than the one "announced" for at the day by your bank that you actually get away with taxing a smaller amount?
That would be too good! The practical reality is such that you should interpret this law to the benefit of the tax authorities and not your own - if you get a favourable exchange rate, you'll still pay tax at the actual exchange rate (i.e., you get to tax the difference). If you are unfortunate enough to negotiate a rate of exchange worse than that "announced" on the day, you also get to be taxed based on the actual "announced" exchange rate.
But enough of foreign exchange ... or perhaps not?
Amnesty
Those of you following the media will have seen that the Senate approved the so-called abolition legislation. Summarised, this is an act which, if signed in due course by the president (which it appears likely) will, on a one-off basis, allow individuals who have, in the period 1996 to 2001, for whatever reason, omitted to declare amounts of income for tax purposes, to do so.
The benefit they will have of declaring such previously undisclosed income is that under this new legislation they will only be required to pay a flat rate tax of 12% on the full amount, rather than risking penalty interest, a penalty of 75% of gross undisclosed income and or the less than friendly provisions of the Fiscal Penal Code if they fail to disclose and the tax authorities catch them out.
This is particularly nice for those individuals who, for whatever reason, forgot in the past to disclose their entire income to the tax authorities. It does leave a somewhat bad taste, however, for those law-abiding individuals who have been dutifully declaring and taxing their total income at rates up to 40%.
But that it is only the beginning. A further amendment to the tax ordnance, passed in conjunction with this new proposed legislation, provides for all individuals who use these one-off provisions to be obliged to file a Declaration of Estate. This is to enable tax authorities to double-check that the value of an individual's estate tallies with his level of declared income.
Catch 119a
Legislators decided unfortunately to go one step further. Since they were bringing in such declarations for some, they decided to bring them in for all. You might think this a fairly reasonable idea. Certainly there is a level of logic behind it. However, this again is a case where the simplicity of the wording may give rise to interesting consequences.
The proposed Article 119a of the legislation states that a Declaration of Estate (this means entire world-wide estate) should be filed by persons who have their place of residence (miejsce zamieszkania) or place of stay (pobyt) in Poland. Because the place of stay is not further defined to specify permanent or temporary, then the new regulations may well require all individuals in Poland to file such a declaration.
You have to decide what exactly constitutes a "stay" in Poland. Would this mean that Tina Turner, should she ever decide to come back to Poland to give a concert, would be required to file a declaration of estate? Logic would dictate that this would be absurd, but where do you draw the line? If the legislation is to affect all individuals who stay in Poland whether temporarily or permanently, then why should an individual who stays in Poland for three days be treated any differently than one who is here, equally temporarily, but for three months or two years.
If the authorities really do expect all individuals, regardless of length or nature of their stays, to file a declaration plus up to eight appendices, when are they going to find the time to process all the information? Or is this just a cunning plot to bring down the level of unemployment?
