Draft version of amendments to the PIT and CIT acts and to the tax ordinance.
On 24 August 2018, the Government Centre for Legislation published at its website a draft version of amendments to the PIT and CIT acts and to the tax ordinance. The amendments should be implemented on 1 January 2019.
The most important changes refer among others to the introduction of:
1) tax on income from unrealised profits connected with the taxpayer transferring their assets or residency to another country (exit tax). The new tax will refer to income actually generated in the period when the taxpayer was subject to taxation in Poland but Poland loses the right to charge tax on it because of the change of residency. The tax will cover natural persons and legal entities, including persons who do not run business activity. The tax rate shall amount to 19% or, in some cases, 3%.
2) Harmonisation of the rules of settling the costs connected with using personal cars for vehicles constituting fixed assets and used under lease or rent. The value of the car which allows full deduction of depreciation write-offs and inclusion of the insurance premium in the tax deductible costs is increased to PLN 150 thousand (the limit refers also to leasing instalments and lease rent), however full inclusion of expenses for a car will require keeping detailed mileage records in the same way as for the purpose of full VAT deduction. Lack of records automatically means mixed use (private and business). In the case of mixed use, it is possible to include 50% of the expenses in the tax deductible costs. In accordance with the transition regulations, from the end of 2020, the planned regulations will also cover leasing and rent agreements concluded before publishing the amendment.
3) additional tax liability connected with tax evasion, application of the measures limiting the contractual benefits, regulations on transfer prices and the so called small clauses against tax avoidance. The tax authority, while applying the above regulations, will be obliged to determine an additional liability in the amount of 10%, and in some cases even 40%, of the tax benefit achieved by the taxpayer. In specific cases, those rates can be doubled.
4) inclusion of funds, trusts and similar entities with duties appropriate for controlled foreign companies (CFC).
5) regulation stating that collection of the so called withholding tax (WHT) on payments to one taxpayer exceeding the amount of PLN 2 million per year will take place without taking into account the tax release or decrease of the tax rate specified in the double taxation agreement. The draft version contains the rules of returning such overpaid tax upon request of the taxpayer. One can withdraw from such method of settling WHT provided that the unit manager submitted a statement under penal liability that there are no circumstances excluding the possibility of using the preferential taxation methods.
6) preferential taxation of the income generated by the intellectual property rights in the so called “innovation box”. The draft version contains taxation of the revenues on licence liabilities and sale of intellectual property rights with the rate of 5%.
7) decreased CIT rate in the amount of 9%. Taxation with a decreased tax rate will be applied to income from the operating activity. It will be available to the taxpayers whose annual revenues do not exceed EUR 1.2 million.
8) the possibility of increasing the tax deductible costs by the hypothetical costs of obtaining the external capital if the financing source means additional payments made by the partners or the so called retained earnings (notional interest deduction). The tax deductible costs may also include the hypothetical interest up to the amount of PLN 250 thousand.
9) regulation of the taxation rules for income on virtual currency. Income on trade with currencies will be subject to taxation under the rules applicable to monetary capitals. An exchange between virtual currencies will not be subject to taxation. There will also be regulations concerning taxation of currency “digging”.
10) obligation to provide the tax authorities with information about tax charts (MDR).
We will regularly inform you about the progress in the legislative process.
If you are interested in discussing the potential consequences of the proposed changes, you are welcome to contact us.