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CIT simplified from 2019

2018-11-07

Works are underway in the Sejm on a draft law to amend several statutes aiming at simplifying procedures for businesses in tax and commercial law (the so-called SME Package). The bill provides for amendments to a number of statutes in order to make doing business in Poland more straightforward.

Undoubtedly, one of the most important amendments proposed in the bill is an increased sales threshold allowing one to retain the ‘small taxpayer’ status – EUR 2 million compared to the current EUR 1.2 million. This will allow a greater number of businesses to settle their taxes on a quarterly basis and make one-time depreciation write-offs of up to EUR 50 000. The CIT taxpayers enjoying the status of a small taxpayer, having met certain other criteria, will be eligible to apply the reduced 9% tax rate.

Another solution provided for in the bill will allow one to settle a single tax loss of up to PLN 5 million. A loss exceeding that amount will be settled on general terms, i.e. over the remaining four subsequent years with the settlements for each year never exceeding 50% of the amount of the loss. According to the bill’s statement of reasons, the change will allow businesses to recover from financial losses more quickly by allowing them a considerable reduction in taxes already in the following fiscal year.  It should be stressed that it will be left to the business’s discretion to opt for the new solution or choose to settle a loss on the current terms over five consecutive fiscal years.

Other solutions proposed in the bill include:

  • Exempting alternative investment companies (AICs) from income tax on the sale of shares in other companies provided that such an AIC has held a minimum of 10% shares in a given company for a minimum of 2 years;
  • Tax exemption of insurance compensation obtained from an insurer as a result of a fixed asset being destroyed or damaged (with the exception of passenger cars). The exemption will be conditional on the taxpayer reinvesting – not later than until the end of the next fiscal year - the equivalent of such compensation in repairing a damaged asset or purchasing or creating a new fixed asset;
  • Cancellation of certain reporting obligations:
    • Taxpayers whose fiscal years do not coincide with calendar years will be required to notify the tax authorities of the fact in an annual tax return for the fiscal year preceding the first modified fiscal year;
    • It is proposed that taxpayers notify the authorities of their choice to pay their tax advances on a quarterly basis in an annual return for the fiscal year in which they applied such a system of tax settlements. Thus, it will be no longer necessary to inform of one's resignation to pay quarterly advances. An analogous solution has been adopted in the case of simplified tax advance settlements.

The amendment is intended to enter into force on 1 January 2019, except for the provisions for which another date has been stipulated. This applies inter alia to the provisions for increasing the small taxpayer eligibility threshold, which are to enter into force on 1 January 2020.

 

Anna Skórska, Tax Consultant, ATA Tax Sp. z o.o.

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