The Sejm has received a package of tax solutions that are part of the Polish Deal, which the Council of Ministers adopted at yesterday's meeting.
Design Act amending the Personal Income Tax Act, the Corporate Income Tax Act and certain other acts assumes, among others, the following solutions:
Within the scope of the Personal Income Tax Act
- increase of the tax-free amount to PLN 30,000„ from tax for all taxpayers of personal income tax calculating tax according to the tax scale;
- increasing the income threshold to PLN 120,000, which starts the second income bracket to which the 32% tax rate applies;
- introducing a "middle class relief" – it will apply to full-time employees with annual income from employment contracts ranging from PLN 68,412 to PLN 133,692 – thanks to this relief, the reform is to be neutral for taxpayers employed under an employment contract with an income of approximately PLN 6,000 to PLN 11,000 per month;
- reduction of health insurance contributions for insured persons who are taxed at the uniform 19% tax rate – the contribution for this group of insured persons will amount to 4.9% of the assessment base;
- increasing the attractiveness of Poland as a place to transfer tax residence:
- introduction of a new relief, the so-called return relief – the relief will consist in exemption from income tax on income up to PLN 85,528 from work, contracts of mandate and business activity (taxed according to the scale, flat tax or lump sum on recorded income), and will be available to taxpayers who have transferred their place of residence to the territory of the Republic of Poland and have had an uninterrupted place of residence in another country for at least 3 years before transferring their place of residence to Poland;
- an attractive form of taxation of income derived from sources located abroad – the regulation is dedicated to a specific group of taxpayers interested in transferring their place of residence (tax residence) to the territory of the Republic of Poland, who have above-average levels of assets (so-called high net worth individuals);
- the obligation to keep books and records of fixed assets and intangible assets using computer programs, as well as the obligation to send them in a structured form in accordance with the principles set out in the provisions of the Tax Ordinance Act, after the end of the tax year (this obligation has been postponed from 2025/2026);
- tax incentive for entrepreneurs incurring costs related to the trial production of a new product and the introduction of a new product to the market, increasing revenues from the sale of products, purchasing industrial robots or incurring costs related to the acquisition of shares (stocks) – introducing solutions in the field of:
- preferences for taxpayers investing in alternative investment companies,
- reliefs for taxpayers earning income from business activities who incur costs: in connection with the employment of highly qualified employees in research and development activities (relief for innovative employees), trial production of a new product or introducing it to the market (relief for prototypes), to increase revenues from the sale of products (pro-growth relief);
- change in the regulations regarding the collection of withholding tax (WHT):
- clarifying the definition of beneficial owner;
- narrowing the scope of the objective and subjective application of the withholding tax procedure (WHT refund);
- clarification of the due diligence criterion;
- extending the scope of the opinion on the application of the exemption to include preferences provided for in double taxation treaties (i.e. reduced withholding tax rates or exemption from the obligation to collect withholding tax);
- introducing the possibility of using a copy of the residence certificate;
- updating the criminal provisions regarding WHT (KKS);
- simplification and streamlining of transfer pricing regulations (simplification of the rules for signing a declaration on the preparation of transfer pricing documentation, new documentation exemptions, extension of the deadline for submitting transfer pricing documentation, simplification of the rules for making transfer pricing adjustments, change of the sanctions from the Penal Code);
- attribution of income to the employer due to illegal employment of an employee or failure to report the correct amount of income from the employment relationship;
- popularization of cashless transactions in Poland:
- relief for taxpayers of personal and legal income tax who incurred expenses in the tax year related to the purchase of a terminal and handling payment transactions using a payment terminal,
- obliging entrepreneurs to ensure the possibility of making payments using cashless payment instruments;
- establishing an upper threshold for cash settlements, beyond which the consumer will be obliged to use non-cash forms of payment;
- lowering the upper limit for cash settlements between entrepreneurs;
- attribution of revenue to the entrepreneur in the event that the entrepreneur accepts payment in cash from the consumer, in a situation where the consumer is obliged to make the payment via a payment account;
- tightening the income tax system by:
- expanding the catalogue of assets used in business activities, the sale of which for consideration after their withdrawal from business activity is classified as income from business activity for income tax purposes;
- changes in the depreciation of assets acquired before they are used in business activities;
- exclusion of depreciation deductions for buildings and residential premises from tax costs.
In the scope of the CIT Act
- in the scope of lump sum tax on income of capital companies:
- extension of the catalogue of entities entitled to lump sum taxation to include limited partnerships and limited joint-stock partnerships;
- waiving the need to incur specific investment outlays as a condition for applying the lump sum provisions, while retaining the possibility of incurring them in order to benefit from the preferential lump sum rate;
- waiving the condition regarding the upper limit of income of taxpayers taxed on a lump sum basis and, consequently, also the additional tax liability;
- making the deadlines for repayment of tax liabilities more flexible in the scope of the so-called initial correction, and in some cases also abolishing the obligation to pay this liability;
- shifting the moment of taxation of income from retained earnings generated during the lump sum taxation period to the time of their actual distribution;
- simplification of rules related to the formation and functioning of tax capital groups;
- change in the regulations regarding the collection of withholding tax (WHT):
- clarifying the definition of beneficial owner;
- narrowing the scope of the objective and subjective application of the withholding tax procedure (WHT refund);
- clarification of the due diligence criterion;
- extending the scope of the opinion on the application of the exemption to include preferences provided for in double taxation treaties (i.e. reduced withholding tax rates or exemption from the obligation to collect withholding tax);
- introducing the possibility of using a copy of the residence certificate;
- updating the criminal provisions regarding WHT (KKS);
- introduction of the holding regime, which will be based on on the exemption from CIT 95% of the amount of dividends received by the holding company from subsidiaries and full exemption from CIT of profits from the sale of shares or stocks in subsidiaries;
- attribution of income to the employer due to illegal employment of an employee or failure to report the correct amount of income from the employment relationship;
- tightening the income tax system by:
- clarifying and tightening the regulations relating to income from a Foreign Controlled Entity (ZJK);
- introducing a basis for taxing the so-called shifted income – new Article 24aa of the CIT Act, in order to eliminate the possibility of obtaining tax benefits through tax schemes aimed at transferring income to jurisdictions with a negligible effective tax rate;
- introducing regulations limiting the possibility of including artificial costs in tax costs in connection with the payment of benefits constituting the so-called "hidden dividend";
- clarifying the criterion of management in the territory of Poland in relation to taxpayers not having their registered office in the territory of the Republic of Poland;
- introducing a mechanism to support entrepreneurs who are CIT taxpayers in activities aimed at increasing their presence on foreign markets:
- addressed to residents and non-residents conducting business in the territory of the Republic of Poland through a "foreign establishment" located in Poland;
- a taxpayer incurring so-called "qualified expenses" for the acquisition of shares in a foreign capital company (limited liability company or joint-stock company) would have the right to reduce his tax base by these expenses in the year they were actually incurred;
- however, the maximum amount of such reduction could not exceed the amount corresponding to PLN 250,000 in a tax year;
- "qualified" expenses for the acquisition of shares or stocks in a foreign capital company would include expenses for legal support of the transaction of acquiring shares or stocks, including their valuation (due diligence), interest, taxes directly charged on this transaction and notary, court and fiscal fees;
- however, such expenses would not include the price paid by the taxpayer for the acquired shares (stocks) and the costs of debt financing related to such acquisition;
- the taxpayer would be entitled to the deduction if certain conditions were met;
- minimum income tax:
- repealing Article 15e of the CIT Act, which limits the amount of costs of obtaining revenues incurred by the taxpayer for the purchase of certain services or intangible rights, and incorporating the existing regulation in a manner appropriate to the proposed provisions defining the minimum income tax (Article 24ca);
- introducing an alternative minimum corporate income tax rate in the CIT Act in the amount of 10% of the tax base, addressed to taxpayers who are companies within the meaning of Article 3, Section 1 of the CIT Act, tax capital groups, and (respectively) taxpayers conducting business through a foreign establishment located in Poland, who:
- they incur losses from sources of income other than capital gains, or
- they demonstrate a certain low profitability ratio from operating activities (i.e. the share of income, determined in accordance with Article 7, paragraph 1, in revenues constituting no more than 1%);
- the tax base will, in principle, be the sum of the amounts specified in the provision, which may consist of:
- 4% value of income from sources other than capital gains;
- debt financing costs incurred on behalf of related entities,
- deferred income tax resulting in an increase in gross profit/reduction in net loss,
- costs incurred for the purchase of specific services or intangible rights for the benefit of related entities (entities from a country or territory applying harmful tax competition);
- The minimum income tax will consist of two parts:
- 0.4% revenue
- 10% excess passive payments to related entities of the capital group;
- the values reducing the tax base will be:
- all deductions reducing the tax base referred to in Article 18, excluding, however, the reductions under Article 18f, while subject to the appropriate application of Article 27 paragraph 4a;
- income that is included in the calculation of tax-exempt income under Article 17 paragraph 1 item 34 or 34a (activity in PSI), for a taxpayer benefiting from tax exemptions referred to in these provisions.
- the aim of the introduced solution is to limit the use of optimization mechanisms by taxpayers that may result in reducing tax liabilities by underestimating tax income;
- the introduction of a minimum income tax is expected to result in an increase in budget revenues, among other things due to the elimination of the foreign CIT gap;
The proposed date of entry into force of the Act is 1 January 2022.
The bill was submitted for first reading at the Sejm session.
The content of the project is available here.