- Small taxpayers, as defined by Article 2(25) of the VAT Act, enjoy certain tax privileges, including in VAT settlement.
- Small taxpayers have the option to choose the cash method of VAT settlement, where the tax obligation is determined by the receipt of payment rather than the date of delivery of goods or services.
- The cash method allows small taxpayers to maintain financial liquidity by not reporting output VAT until payment is received from the customer.
- Proper documentation, such as marking invoices with “cash method,” is required when using the cash method.
- Small taxpayers using the cash method must submit quarterly JPK_VAT returns by the 25th day of the following quarter, simplifying VAT settlements to four times a year.
- There are exceptions to the cash method, such as specific goods or services and certain types of transactions.
- If the sales limit for a small taxpayer is exceeded, they lose the right to use the cash method, but the method still applies to sales made during the eligible period.
- The cash method affects the reporting of input tax, allowing the deduction of input tax only in the settlement period when payment for purchases is made.
Source MDDP
