The sale of liquids (so-called liquids) for e-cigarettes, disposable e-cigarettes and vaporization devices is in full swing. — The practice consists in products being offered and sold to Polish customers via mail order from other EU countries. In this way, sellers avoid Polish excise duty, explains Wojciech Kotala, tax advisor and partner at the Cabaj Kotala Law Firm.
Buyers of liquids, e-cigarettes and devices end up paying half as much for these products. As the expert says, they are not aware that they should pay excise duty in Poland. — Therefore, the provisions of the excise duty act are being violated and state budget revenues are being reduced. The problem is that the National Tax Administration does not pursue buyers, says Wojciech Kotala.
The government has all the tools to counteract this and end the practice. The Ministry of Finance knows the problem. Business Insider asked the ministry for its position on this matter. We are waiting for your reply.
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What is the problem with avoiding excise duty? What is the gap in the law?
Currently, excise tax on e-cigarette liquid, e-cigarettes and devices is high.
Excise tax rates are:
1) for liquid for electronic cigarettes – PLN 1.55 for each milliliter,
2) for electronic cigarette liquid contained in a disposable e-cigarette – PLN 40,
3) for vaporization devices – PLN 40 per unit.
However, some companies have found a way to offer these products without excise tax. As Wojciech Kotala says, the problem is a loophole in the law.
The expert explains that e-cigarette liquids, disposable e-cigarettes and vaporization devices (excise products) are not listed in Annex 2 to the Excise Duty Act, and consequently Art. 79 of this Act. According to this provision, if a person buys for his own needs from another EU country excise goods listed in Annex 2, the excise duty must be paid by the sending foreign entity.
Since the excise product is not listed in Annex 2 (like all three products above), the consignor does not have to pay excise duty in Poland. However, this obligation falls on the Polish buyer, regardless of whether it is an individual or a company.
Therefore, if liquids, e-cigarettes and devices are purchased by an ordinary consumer, he or she is obliged to submit a simplified declaration and pay excise duty. If he does not do this, he is breaking the regulations and is exposed to sanctions. If the buyer runs a business has even more obligations, including payment of excise tax.
Entities offering products via EU websites take advantage of the regulations and pass on the obligation to pay excise duty to Polish buyers. When entering the website of an EU seller, a consumer sees a price without excise duty, which is much lower than the price in Polish stores. However, the websites of these EU sellers are in Polish and deliveries are made by Polish courier companies.
— The problem is that Polish customers purchasing excise goods in EU online stores do not fulfill their obligations under excise tax regulations, and the state authorities (National Tax Administration bodies) do not take any control activities in this regard – says Wojciech Kotala.
Who loses from this practice?
As Wojciech Kotala says, the above procedure leads to an unfair competitive advantage of EU sellers over Polish e-cigarette companies that reliably settle excise duty and bear the cost of excise duty. — For example, this advantage has a financial value of up to several zlotys on a small bottle of liquid for electronic cigarettes. Polish producers offer such liquid in stores for at least PLN 30, and on the websites described the price of such liquid is around PLN 20 – explains the expert.
Polish manufacturers sell vaporization devices for over PLN 150, and on foreign websites they are offered to Poles for about PLN 75.
The state budget also loses as a result of this practicebecause the tax offices do not receive the excise tax due.
How to end the practice of avoiding excise duty
Wojciech Kotala indicates that the government should urgently change art. 79 of the Act on excise duty, that it applies to mail order sales of selected products other than those listed in Annex 2 to the Excise Act.
– This way it should be ensured that the sending foreign entity is treated under the Excise Duty Act as an entity making intra-Community acquisitions in Poland and that it (and not the customers) is obliged to settle and pay excise duty on products delivered in Poland to natural persons – he convinces Wojciech Kotala.
According to the expert, until the regulations are changed, the National Tax Administration should control Polish customers of foreign online stores, i.e. recipients of products in Poland, including natural persons purchasing products for their own needs. According to current regulations, they should pay excise tax on the products they buy.
Author: Łukasz Zalewski, journalist of the Law section, Business Insider Polska
