SI-DEBT

SI-DEBT is a solution for the SAP platform dedicated to entrepreneurs. It will simplify and partially automate the process of VAT refund for "bad debts". 

Did you know?

The method of settling VAT concerning bad debts is set out in Art. 89a and Art. 89b of the VAT Act. According to these provisions, the creditor, after meeting the conditions specified in the provisions, is entitled to adjust the output VAT, while the debtor is obliged to adjust the deducted VAT. 

The right to make a VAT adjustment by the creditor 

The taxpayer may adjust the tax base and the output tax on the supply of goods or services in the territory of the country in the case of receivables, the irrecoverability of which has been rendered credible. The adjustment also applies to the tax base and the amount of tax attributable to the part of the receivable, the irrecoverability of which has been rendered credible. 

According to Article 89a section 1a of the VAT Act (Journal of Laws [Dziennik Ustaw]from 2020, item106, as amended), the irrecoverability of receivables is considered as rendered credible when the receivable has not been settled or disposed of in any form within 90 days from the due date specified in the contract or on the invoice. 

When can a creditor benefit from bad debt relief?

A creditor who intends to take advantage of the bad debt relief has to additionally meet the conditions specified in Art. 89a sec.2 of the VAT Act. The conditions are as follows: the supply of goods or services is made to a taxpayer registered as an active VAT taxpayer, not in the process of restructuring, bankruptcy, or liquidation proceedings, on the day preceding the day of submitting the tax return on which the adjustment is made: 

  •  the creditor and the debtor are taxpayers registered as active VAT taxpayers, 
  • the debtor is not in the process of restructuring, bankruptcy, or liquidation. 

In addition, the bad debt relief can be used when no more than 2 years have passed from the date of issuing the invoice documenting the debt, counting from the end of the year in which it was issued. 

In Art.89a sec.3 of the VAT Act, it was indicated that the creditor has the right to make adjustments to the tax base and the output tax in the settlement for the period in which 90 days have elapsed from the date of expiration of the payment deadline specified in the contract or on the invoice. Such an adjustment can be made provided that, by the date of submitting the tax return for that accounting period, the receivable has not been paid or disposed of in any form. 

It should be emphasized that at present the taxpayer is not obliged to submit a notification of adjusting a bad debt relief on the VAT-ZD form. 

On the other hand, in the JPK_V7M file, the taxpayer (the creditor) taking advantage of the bad debt relief fills in the registration part for the entire document in the "Tax Base Amendment" (pl. "KorektaPodstawyOpodt") field by marking "1". Then they can declare the adjustments of the tax base and output tax individually with the "-" sign with division into tax rates. Afterward in the declaration in the fields P_68 and P_69 "Amendment under Article 89a section 1 of the ACT" ("Korekta, o której mowa w art.89a ust.1 ustawy") the taxpayer provides the summary amount of this adjustment of the tax base and output tax respectively. Both should be preceded by the "-" sign and were included in items K_15 to K_20 of the VAT register. 

Meet SI-DEBT

SI-DEBT is a solution for the SAP platform dedicated to entrepreneurs. It will simplify and partially automate the process of VAT refund for "bad debts".
Preparation of the SI-DEBT report in SAP based on sales documents subject to the guidelines; in the broad sense: "bad debt relief". These documents may be subject to VAT adjustments under 

Articles 89a and 89b of the VAT Act.

  • Directly in the report, by indicating individual documents or a list of documents, the user decides whether a given set of documents is to be included in the posting process as: "bad debt relief". 
  • In the SI-DEBT report, all postings are made automatically, and the posting result is also reflected in JPK_VAT - SAF_T (after appropriate configuration). 
  • In the case of using another tool to generate JPK files, there will be a need for joint analysis to identify functionality. 
  • Postings within the tool should be made on technical accounts indicated by the customer and using new dedicated VAT codes. 
  • The entry in the recipient's position will be made with the new special operation code.
  • Documents posted as relief are subject to subsequent analysis in the context of settling the original, settlement documents. As a result, the client receives information that a given document posted as a relief should be adjusted. 

It is possible to do even more with the SI-DEBT report!

The SI-DEBT report enables entrepreneurs to:

  • exclude a dedicated list of VAT codes from the selection,
  • exclude a dedicated list of recipients,
  • indicate dedicated types of FI documents subject to selection, 
  • access the list of documents booked as "bad debt relief",
  • access the list of adjusted documents concerning the previous relief document. 

The following are subject to individual pre-implementation analysis:

 

  • recognition of the settlement method of part payments,
  • compensations.

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