New burdens for entrepreneurs implemented by the law on burdens reduction
Under the motto of reducing administrative burdens in the economy the Government has prepared for entrepreneurs new legal provisions implementing obligations the performance of which may render the settlement of income taxes significantly difficult and complicate the work of finance professionals.
The provisions of the so called deregulatory law published on 30 November 2012 stipulate that the amounts due which have not been paid within 30 days after expiry of the due date must be excluded from tax deductible costs. In the case of due dates exceeding 60 days, costs should be adjusted with expiry of 90 days after the date on which the amount concerned was included under tax deductible costs.
Accountants and individuals required to account for taxes face tedious work which entails recording purchase documents with due dates below and above 60 days, and calculating (separately for each individual document) the time limit of 30 or 90 days for mandatory reduction of costs after the lapse of these time limits.
In addition, the above adjustments will apply to the initial value of tangible and intangible fixed assets.
If following reduction the amount due is paid, it will be possible to make a reverse cost adjustment, which means to increase costs.
Because in financial accounting the accrual method is used, i.e. costs are booked when incurred, the majority of accounting software is not adapted to make the above cost adjustments. It will mean more work for finance professionals and additional costs for entrepreneurs.
Please note that the legislator has not changed the principles applying to accounting for revenues. So if the taxpayer’s counterparty is in default with payment for the invoice issued, the taxpayer will have to pay PIT or CIT on the invoice anyway. The reimbursement of the tax paid in such cases will be possible, according to the existing law provisions, through a deduction of bad debts, provided that the taxpayer has adequate documents confirming that the receivables are unrecoverable.