As of 2017 expenses paid in cash in excess of PLN 15,000 will not be tax deductible
As of 1 January 2017, in connection with the amendment of the Act on Freedom of Business Activity, entrepreneurs are required to make payments to other entrepreneurs via a bank account if the transaction value on a single basis, regardless of the number of payments it involves, is in excess of the equivalent of PLN 15,000. This amendment has also influence on the principles for determining tax deductible costs in connection with incurring expenses for which payment is made in cash.
Entrepreneurs who are personal income taxpayers and corporate income taxpayers and, in spite of the existing obligation, will make payments for transactions above PLN 15,000 in cash, will not have the right to include such expense under tax deductible costs (Article 22p of the Personal Income Tax Act and Article 15d of the Corporate Income Tax Act in their wording effective as of 1 January 2017).
In the event that an expense for which the amount due was paid without using a bank account has been included under tax deductible costs, taxpayers pursuing non-agricultural business activity are required to reduce tax deductible costs or, if such reduction is not possible, to increase revenues in the month in which the payment was made without using a payment account.
The above principles apply also to expenses for the acquisition or construction of tangible fixed assets or the acquisition of intangible assets. So if an expense in excess of PLN 15,000 was made and paid in cash, taxpayers will not be able to make depreciation charges for tax purposes (depreciation charges will not be treated as tax deductible costs).
In accordance with the amended regulations, those principles are also applicable to payments made after liquidation of non-agricultural business activity and after changing the form of taxation to lump-sum taxation as laid down in the Act on Lump-Sum Tax, and in such case tax deductible costs are to be decreased or revenues are to be increased, respectively, for the tax year in which the activity was liquidated or for the tax year preceding the one in which the form of taxation was changed.
Pursuant to transitional provisions, the new principles for determination of tax deductible costs in connection with making payments in cash in excess of PLN 15,000 are applicable to payments made in the tax year commencing after 31 December 2016. Also the new principles do not apply to payments which are related to expenses included under tax deductible costs before 1 January 2017.