NEW YEAR – NEW VAT LAW ENFORCEMENT RULES

Happy and prosperous 2025. rascal! I have to say that almost 2 weeks “break” was really needed to take my breath a little bit after the crazy “Rabbit Year Run”. Now you can enter the New Year with renewed vigor and energy!

Take note that with 2025. 1st of the year. a number of changes will take effect in January (a summary of which will follow next week).

And 2025. VAT law enforcement rules have also been “refreshed” for the year. Although the changes are mostly technical, there are also some new rules worth paying attention to.

In general cases, if goods are purchased and services received with VAT for securing transactions, then you (as a registered VAT payer) can deduct the amount of VAT on the purchased goods and services in the invoice as a pre-tax. However, the rules of applying VAT law provide an exception – if goods and services are intended for the relaxation of your [as a registered VAT payer] employees, personal needs (including TRANSPORTATION SERVICES, FUEL PURCHASE and electronic communication services), catering, health improvement and entertainment events, then the VAT amount specified in the bill CANNOT be deducted as a pre-tax.

Considering that this exception is widely interpreted in practice, as a result, your right [as a registered VAT payer] to deduct pre-tax on transport services in situations where employees are transported to the workplace are restricted more often than you would like, then the legislator decided to finally address this situation.

It is assumed that the employer-provided transportation of employees with a company-owned vehicle from the residence to the workplace is for the private needs of the employees and therefore for purposes unrelated to the company. However, if the needs of the company require the transportation of employees to be provided by the employer, then this service cannot be considered to be provided for purposes unrelated to the company.

Taking into account the aforementioned, the employer has the right to deduct preferential tax if the transport services of employees are used for company-related purposes, WHICH ARE NOT OTHER THAN THE PURPOSE OF FARM OPERATIONS, such as:

1) if workers are transported to manufacturing, packaging factories or warehouses located in remote locations and getting to the workplace by public transport is NOT POSSIBLE or NOT USEFUL, judging by the time traveled and the schedule of public transport,

2) whether employees are taken to the workplace at the airport while public transport is not working,

The examples mentioned are not the only ones! In practice, other situations are also possible, if evaluating the economic nature of the transaction, it is concluded that the services are used for providing or carrying out business, and the cost of the service constitutes part of the overall cost and the price of goods sold or services provided.

On the other hand, if transport services are used to transport employees to an office located near public transport, or office workers use flexible working hours, and it is possible to get to the workplace by public transport, then in this case it is considered that transportation services are used for the personal needs of the employees. Appropriately deduct pre-tax for these transport services CANNOT!

It must be said that a similar procedure has already been set in the UIN law, so I cannot say that these rules are anything new. However, it is useful to remember and prepare a “defense file” which grounds that you have carefully assessed the situation and transport of employees, for example, from home to office, is really economically sound and useful.

Other amendments to the amendments in the application of VAT law are technical (and aimed at reconciling VAT law rules with regulations or to prevent incorrect interpretation of VAT law).

For example:

1) Further, to extend the registration period in the VAT Payers Register (for those registered for a fixed period), a special form designed for this purpose will have to be used in place of a free form application;

2) Updated VAT registration application form (due to increase VAT registration threshold and new NACE 2.1. editorial use from 2025. 1st of the year. january)

3) Rules supplemented with medical services that are not taxable;

4) Adjusted rules on the application of VAT for training classes for children’s camps. (If you remember, the regulation previously provided for an age limit so that the payment for training classes would not be VAT applicable. 2024 the year age limit was lifted. Now the age limit is also stripped in the rules).

5) Finally, the rules also provide clarity on how to calculate the VAT registration threshold for those who apply VAT Act 136. the special regime (for providing tourism services) stipulated in the article.

Your Alice