Under the already passed Act on Payment Blockages from 1 January 2020 in the tax settlement it will be possible to deduct the relief for bad debts, in the PIT or CIT.
This kind of relief already functions in VAT settlement under Article 89a(89b) Act of 11 March 2004 about tax on goods and services (more info. HERE ). The new law prepared by the Ministry of Entrepreneurship and Technology provides for the possibility of deducting debt in the annual settlement of PIT and CIT.
This will be possible by amending the Act from 15 February 1992 on corporate income tax (Journal of Laws of 2019, items 865, 1018, 1309), in which the Article 18e the following is added: Article 18f the following:
„Article 18f. 1. Tax base established in accordance with Article 18 or Article 24d(3) and after deduction of the amounts specified in Article 18d:
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may be reduced by the value of the claim for payment of the cash benefit within the meaning of Article 4(1a) Act on the prevention of excessive delays, which has not been regulated or disposed of, with reductions being made in the tax return submitted for the tax year in which it passed 90 days from the date of expiry of the payment period specified on the invoice (account) or in the contract;
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is subject to an increase of the value of the liability to pay the cash benefit as defined by the cost of obtaining revenue Article 4(1a) Act on the prevention of excessive delays, which has not been regulated, with an increase being made in the tax return submitted for the tax year in which it passed 90 days from the date of expiry of the payment deadline specified on the invoice (account) or in the contract.’
However, the debtor on the last day of the month preceding the day of the submission of the tax return may not be in the course of restructuring, insolvency or liquidation proceedings; the date of issue of the invoice (account) or conclusion of the contract documenting the claim has not expired 2 years from the end of the calendar year in which the invoice (account) was issued or the contract was concluded and, where the calendar year in which the invoice (account) was issued is different from the calendar year in which the contract was concluded, when it has not expired 2 years from the end of the calendar year following these activities; and the commercial transaction is concluded in the activities of the creditor and in the activities of the debtor, from which income is subject to income tax in the territory of the Republic of Poland.
The relief applies only to commercial transaction claims, not to natural persons. By means of amendments to the laws aimed at reducing congestion, the deadline for payment is also reduced – 30 days for payment to public entities, 60 days to pay for larger companies in relation to smaller ones. New is also the reporting of the Ministry of Entrepreneurship and Payment Practices by the largest companies.
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.