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Mazars is a global integrated firm with presence in major economies of the world, so we understand the complexities of tax in today’s global economic climate.
Selected changes in corporate income tax
According to the justification of the draft law, the introduction of this levy to the Polish legal system is aimed at limiting optimisation activities that could result in reducing tax liabilities by understating the income.
The tax is to be imposed on all CIT taxpayers (including non-resident entities, conducting their business activity through a permanent establishment located in Poland) and tax capital groups (PGK).
The above-mentioned entities will be obliged to pay the tax if in a given tax year:
According to the assumptions of the draft law, this tax is to amount to 10% of the tax base, however, if the taxpayer pays a regular annual CIT in accordance with Article 19 of the CIT Act, the minimum income tax will be deductible from it.
The tax base, in turn, will be the sum of the amounts specified in the Act, which may be:
The legislator has also provided that the minimum income tax shall apply neither to taxpayers commencing business activity - during the first 3 tax years of such activity; entities affected by a sudden drop in revenue (by at least 30% as compared to the previous year) nor to financial enterprises.
The bill provides for certain changes in the terms and conditions of PGK's operations, which include, among others:
Are real estate companies these companies whose main source of revenue or income is real estate.
According to the proposed amendments to Article 15 Section 6 of the CIT Act, these companies will be able to recognize as tax deductible expenses write-offs for wear and tear of tangible and intangible assets (depreciation write-offs) in a given tax year only up to the limit set for accounting purposes and charged to the company's financial result in a given tax year.
The most important objective of the proposed amendment is to reduce the differences between the tax result and accounting result reported by entities being real estate companies in a given tax year.
The Polish Order also introduces changes with respect to the lump-sum taxation of income which, since the entry into force of the provisions (as of 1 January 2021) after meeting the conditions specified by law, has been taxed on a voluntary basis only by capital companies, i.e. joint stock companies and limited liability companies.
After the changes, as of January 1, 2022, also limited partnerships and limited joint-stock partnerships will be entitled to use this form of taxation.
Moreover, in order to use this form of taxation, the draft law assumes resignation from the obligation to incur a certain category of capital expenditures (these are expenditures in the form of a fixed percentage of the initial value of fixed assets, included in groups 3-8 of the Classification of Fixed Assets).
The legislator also plans to resign from the condition concerning the upper income limit for taxpayers subject to Estonian CIT.
According to the draft, the rates of aggregate CIT taxation for small taxpayers are to be reduced from 25 per cent to 20 per cent and for large taxpayers from 30 per cent to 25 per cent.
We encourage you to follow our blog articles on the other changes that are planned under the Polish Order. Should you have any questions or concerns, do not hesitate to contact us directly.
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