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Law & Taxes

High excise duty is consistent with the Constitution Beata Brojewska Legal Counsel BHS Law Firm

T

he Excise Tax Act providing for a high excise duty for oil dealers, who have failed to comply with the obligation to draw up and submit to the tax authorities a monthly compilation of the oil buyers’ statements, is in accordance with the Constitution. The provisions of the Act of 6 December 2008 on excise duty in article 89 paragraph 16 introduce penalty excise duty rate in heating oils trade if conditions are not met for being eligible to benefit from the preferential rate. In accordance with article 89 paragraph 14 of the Act, one of the conditions for being eligible to benefit from the excise duty reduced rate is for the oil vendor to draw up a monthly compilation of purchasers’ statements about oil being used for heating purposes and filing it with the tax authorities until the 25th day of the month following the month of the sale. The Excise Tax Act sets out in detail the formal requirements that the statement should meet. A failure to do so entails negative consequences in the form of application of a burdensome excise tax rate. The provision under article 89 paragraph 16 of the Excise Tax Act has aroused many doubts both in trading energy products and in terms of jurisprudence, including its constitutionality. Among the allegations against the constitutionality of the penalty excise duty rate is the non-compliance with article 2 of the Polish Constitution that stipulates the prohibition of undue interference by the legislature. Moreover, according to some constitutionalists, the size of penalties is disproportionate to the objective to be achieved through the performance of the obligation to submit the required documentation to the tax authorities.

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On February 11, 2014 the Constitutional Court settled that article 89 paragraph 16 of the Excise Tax Act - insofar as it imposes application of the excise duty penalty rate, referred to in article 89 paragraph 4 whereof, for a fuel oil vendor being in breach of the obligation to draw up and submit to the tax authorities a monthly compilation of buyers’ statements - is consistent with the Constitution of the Polish Republic.

“The Constitutional Court

stressed that the high rate of excise duty is logically linked to the purpose it serves, which is to regulate oil trading safety and reliability. The relaxation of exemption eligibility requirements would undermine the control mechanism to an extent difficult to estimate.”

The judgment of the Constitutional Court is an answer to a legal question asked by the Regional Administrative Court in Wrocław regarding the lawfulness of the application of the excise duty’s penalty rate in the light of the constitutional norms. The Constitutional Court found that the rigor of the application of excise duty preferential rates in heating oil trade is aimed at ensuring effective control of oil marketing and diminishing the ill practice of using oil

contrary to its intended purpose. It is therefore a necessary and effective element of an oil trading control system, which results in reducing tax frauds related to its sale. The Constitutional Court stressed that the high rate of excise duty is logically linked to the purpose it serves, which is to regulate oil trading safety and reliability. The relaxation of exemption eligibility requirements would undermine the control mechanism to an extent difficult to estimate. According to the Constitutional Court, it is also clear that the obligation to provide the authorities with a monthly compilation of statements, although tedious, is not in itself an excessive discomfort for heating oil dealers. The Constitutional Court’s judgment is impactful for excise goods trade, because it solves the existing practical and predicative doubts as regards the application of preferential excise rates. ::

Polish Market No. 3 (209) / 2014  
Polish Market No. 3 (209) / 2014  

Polish Market” is a prestigious English-language magazine published since 1996. In its pages, it promotes the Polish economy, businesses, re...

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