According to a published notice, the President signed a bill dated 23 October 2018 amending the Personal Income Tax Act, the Corporate Income Tax Act and certain other laws. It follows from the justification for the draft legislative act that the primary objective is to simplify the law in the area of income taxes. The Government further explains that the entry into force of this law is a shift from intensive sealing of tax law to simplification and rationalisation.
one of the changes made is the reduction of the CIT rate for small taxpayers from the rate 15%, that was introduced at the beginning 2017, up to 9%. Although this change seems revolutionary, it should be borne in mind that only some taxpayers will be able to benefit from it, since it is not directed to all those subject to CIT taxation. The reduced rate is to apply to small taxpayers, as well as taxable persons starting a business which do not have to have the status of a small taxpayer.
Paying taxpayers 9% CITs will only be able to make advances at this rate until their revenue in the tax year exceeds the equivalent amount 1,200,000 EUR. After exceeding this threshold, further advances should be calculated at the rate 19%
It should be clarified that whenever the legislator uses the concept of a small taxable person, he refers to a taxable person whose value of the sales revenue (including the amount of the tax due on goods and services) did not exceed in the previous tax year the amount of gold corresponding to the equivalent 1,200,000 EUR.
The amounts expressed in euro shall be converted at the average euro rate announced by the National Bank of Poland to first the working day of October of the preceding tax year, rounded to 1,000 PLN. This means that the limit to which an entity is considered a small taxpayer in 2019 is 5,135,000 PLN (In 2018 was it 5,176,000 PLN).
In view of the distribution by source of revenue in force in the CIT Act, the tax will be 9% the tax base on revenues other than capital gains. This means that taxpayers who generate income from, for example, dividends or other income from corporate profit will not be able to benefit from a reduced rate of taxation on these revenues.
From the rate 9% the taxable person to whom, in the tax year in which the taxable person was established and in the tax year immediately following that, was transferred to the capital previously held by the undertaking, an organized part of the undertaking or assets of that undertaking with a value greater than the total equivalent in the zloty amount; 10,000 EUR.
Another restriction is that the rates 9% shall not apply to a split company, a taxable person who has made a contribution to another entity, including the capital previously held, an organised part of the undertaking or the assets of that undertaking with a value in excess of the total equivalent in 10,000 EUR or the assets acquired by that taxpayer as a result of the liquidation of other taxable persons, if that taxpayer held shares (shares) of those other liquidated taxable persons, in the tax year in which the division was made or the contribution was made, and in the tax year immediately thereafter.
The purpose of this is to limit the use of the reduced rate by unauthorised parties who wish to reduce their actual activity to the statutory limit of a small taxpayer by dividing it into several smaller activities.
Paying taxpayers 9% CITs will only be able to make advances at this rate until their revenue in the tax year exceeds the equivalent amount 1,200,000 EUR. After exceeding this threshold, further advances should be calculated at the rate 19%.
Author:
Rafał Dąbrowski
Lawyer, tax adviser included on the list of National Tax Advisory Board and licensed restructuring adviser. At Russell Bedford in charge of the Department of Tax Advisory. Author of numerous tax-related articles published in the industry press.