TAXATION OF AGRICULTUR ACTIVITY. VALUE ADDED TAX
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In accordance with the provisions of Art. 93 and 94 of the Rome Treaty, the regulations of the EU Member States on indirect taxes are fully harmonized, as far as it is necessary for free trading of goods and services without frontier control limitations. The most important regulation for valid Community VAT taxation system is the Sixth Council Directive 77/388/EEC of 17th May 1977 'on the harmonization of the laws of Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment'. The agricultural production was included in the Community value added tax system. The simplified Community VAT taxation system of agricultural production is construed on two basic assumptions. Firstly – the reduction of excessive complications resulting from general principles of taxation; secondly - partial tax refund for lump-sum agricultural taxpayers of value added tax paid for the purchase of means necessary for agricultural production. The harmonization of Polish and Community regulations was finally effected in the VAT law of 11th March 2004. Delivery of agricultural products and agricultural services are considered as subject to value added tax, as stipulated in the Sixth Council Directive. The taxation rules are however varied. Farmers subject to special producers are named lump-sum taxpayers; other farmers are taxed according to general rules. The taxation method, on the day when the VAT regulations is agriculture came in force, was so constructed that almost all existing agricultural producers became 'ex lege' lump-sum taxpayers.The VAT law proved clear inconsistencies in the definition of such elementary terms as agricultural activity, agricultural household and lump-sum farmer. The object of taxation is also not defined in conformity with the requirements of levy law. As shown above, there is no fixed normative concept of treating agricultural producers as entrepreneurs, neither are their production and the production effects considered as business activity. Consequently, no fixed normative concept of VAT taxation has been developed.
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