The Settlement of the Goods and Services Tax with Reference to Irrecoverable Debts

Abstract

The regulations concerning the VAT settlements with reference to irrecoverable claims were introduced in Poland on the grounds of the act issued on 21st April 2004, which changed the act of the goods and services tax in force since 1st June 2005. Until then the Polish tax system concerning VAT regulations that can be applied in the area of the correction connected with the lack of the settlement of claims were not been known. This situation is beneficial for the creditor, and for the debtor it means the necessity to increase the tax obligations. The constructions of the correction are regulated so that when the creditor introduces the correction decreasing the tax obligation, the debtor will be obliged to increase his tax obligation. The justness of the above regulations is clear when it is indicated that they increase the sense of tax justice and they annul the tax obligation in the cases of failed civil law transactions.