NPBP: Cracking down on illegal operations and fraud

Business-owner – a taxpayer, an employer, and a partner.” What do these words mean exactly? This is the question I asked myself at this year’s Economic Forum in Krynica, Poland, a meeting point for the government, politicians, and business operators. The answer seems quite simple. What business values most highly in a state’s regulatory policy is the stability of the legal system combined with equal treatment of all businesses by the government and a transparent dialogue between the government and business operators in the legislative flow. This very dialogue proved to be the foundation of the state’s economic development on many occasions. On the other hand, the lack thereof had quite the opposite effect. It resulted in redundancies and putting investment decisions on hold by business owners. This dialogue is equally important for small and medium-sized domestic businesses as well as foreign investors, both those already present in Poland and those looking for investment opportunities in this part of Europe.

Limiting VAT fraud in the fuel sector is one of the best examples of successful cooperation between the government and businesses in the recent years. Until 2016, struggling with illegal operators in fuel trade was the day-to-day reality of the industry. The grey and black markets, scams related to VAT, violation of excise duty and mandatory stock regulations, as well as non-compliance with biofuel quotas; all gradually became more prevalent in 2011-2015. According to independent estimates of the time, the value of fraudulent transactions in fuel trade was in excess of PLN 10 billion in 2015 (2016 POPIHN Report). When looking at the data now, we know that this figure was largely underestimated.

The large scale of that pathology led to an open dialogue between business operators and the government, and helped to initiate a legislative process aimed at eliminating the loopholes in the system. The measures taken by the government in 2016-2017 (fuel package, energy package, and transport package; the so-called SENT) helped to significantly reduce crime in fuel trade and increase its legitimate consumption. PKN estimates that in 2016-2018, lawful trade in diesel increased by ca. 30% in Poland. According to official data of Agencja Rynku Energii S.A. (Energy Market Agency), the consumption of diesel will grow by ca. 43% in 2015-2018, with GDP increasing by ca. 13% in the same period. Regardless of the economic growth effect, we believe that the legitimate diesel market expanded by ca. 30% due to cracking down on illegal trade (Press Office of , 4 October 2018). Substantial growth in official con … czytaj dalej

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