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Friday, September 24, 2021

Corporate tax, income tax. The government approved the self-amendment

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The government decided to change the structure of the so-called tax on large corporations. In the self-amendment to the previously adopted draft, it was decided to extend the scope of exemptions from the new levy, according to the communiqué after Tuesday’s government meeting. This includes the situation where the company does not have the freedom to set the price because it is regulated by the state or the price depends on the quotations on world markets. The earlier solutions were criticized by the Ministry of State Assets, emphasizing that they could hit companies of the State Treasury.

It is about a self-amendment to the draft act amending the act on personal income tax, the act on corporate income tax and some other acts. This tax project under the Polish Dealwhich the government adopted last week.

As stated in Tuesday’s announcement, the auto-amendment introduced changes regarding the tax on large corporations. It is about extending the scope of exemptions from the minimum income tax to include entities with a specific business profile, for which a low level of profitability is not a source of tax avoidance, but results from the essence and specific conditions of the conducted activity.

It was added that this applies to cases where the minimum income tax – due to the shape of international agreements – cannot prevent tax avoidance (international transport of ships or aircraft) or the taxpayer (with low profitability) has no freedom to determine the price, as it is regulated by the state (energy) or is dependent on quotations on world markets (minerals).

The self-amendment was tabled by the Minister of Finance, Funds and Regional Policy.

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Tax on large corporations – exclusions

As indicated in the communication, the primary purpose of the tax is to reduce tax avoidance and not to introduce an additional burden. “That is why the government decided to exclude from the limitation of the impact of this tax taxpayers whose profitability is very much dependent on factors beyond their control, such as regulated prices (e.g. energy) or fluctuations in the prices of raw materials in global markets (the mining industry). ) “- added.

It was emphasized that this solution applies to all taxpayers who meet the conditions set out in the regulation. The exemption will therefore be available to all entities that meet the requirements, regardless of the company’s ownership status.

It was reminded that thanks to the proposed solution, large corporations will not avoid paying taxes in Poland. This tax will not be charged to Polish small and medium-sized businesses. On the contrary, it will contribute to creating a fairer system and leveling the market opportunities.

Moreover, this tax will not burden investors and will not reduce Poland’s investment attractiveness. Companies that will incur real investment expenses will also not be subject to it. The tax will also not be levied on companies that are struggling with the effects of the pandemic. It will not cover companies that do not have subsidiaries and whose partners are only natural persons, and such companies in Poland constitute 90 percent. of all CIT taxpayers – this is small and medium-sized Polish business, which will thus be exempt from tax.

Only those companies that experience a loss or whose income is less than 1% will pay the tax. revenues. As a result, only a few percent of companies – the largest corporations – will pay the tax. It is about enterprises that do not pay CIT in Poland, which is not a result of large investments, the use of tax reliefs or a crisis situation, but tax avoidance and aggressive tax engineering.

According to the government, large corporations should pay taxes, just like every taxpayer in Poland, be it an employee or a small entrepreneur.

MAP Notes

Comments regarding the construction of the tax were submitted by Jacek Sasin Ministry of State Assets. The opinion noted that “this is a completely new solution” which was not foreseen in the original draft version of 26 July.

“It appeared only in the Draft version of September 5, and thus it was not subject to public consultation. The analysis carried out by the Ministry of State Assets shows that this new alternative form of taxation may have a negative impact on the financial stability of companies with State Treasury share.” – added the ministry. It was calculated that it could be the amount of PLN 380 million, which will additionally have to be transferred to the tax office.

Main photo source: PAP / Radek Pietruszka

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