Estonian tax, e-tax office or higher revenue limit for use 9% CIT rates – these are some of the proposals included in the National Reform Programme plans.
Day 28 April 2020 The Council of Ministers adopted the draft National Reform Programme (hereinafter: Project), which provides for a number of regulatory changes in the fields of economic, social and tax, by introducing, inter alia, an electronic account for tax purposes or a new form of taxation. The project was created at a time when the epidemic was already in force in Poland, but it is difficult to tell what effect this fact had on the content of the solutions which were included in the project.
The National Reform Programme is an essential instrument for coordinating economic and social policies in the European Union and a key tool for implementing the Europe strategy 2020” at EU level.
Below are the most important assumptions presented in the Project, covering the scope of tax law:
Electronic account for tax purposes – e-government
first from the proposal of the Project aimed at speeding up and electronicising the exchange of information on the business-state line is the initiation of work on the "e-tax office".
Under this institution, entrepreneurs would be able to look at their tax situation fully online, to deal with tax matters in a comprehensive manner, and to obtain integrated operational data in the fields of PIT, CIT, VAT, enforcement proceedings, as well as notarial acts at a single point of contact.
The project planned the launch of electronic services which would be used by taxpayers, payers, attorneys, bailiffs and notaries.
The implementation of these facilitations will take place in several stages, as follows:
- e-account of the court bailiff – 1st quarter 2021
- e-account of notary – 1st quarter 2021
- e-account of the payer – 2nd quarter 2021
- e-account of the proxy – 1st quarter 2022
- e-account of the taxpayer – 1st quarter 2022
As the first electronic platform to be used by bailiffs and notaries, the possibility of using e-accounts for taxpayers and their attorneys is only provided for 2022
Higher revenue limit for use 9% CIT rates
second from the proposed solutions under the National Reform Programme is to extend the catalogue of taxpayers who can benefit from the reduced 9% CIT rate.
The project envisages an increase from 1,200,000 EUR to 2,000,000,000,000 EUR revenue limit achieved in a given year which entitles to benefit from 9% CIT rate. It should be stressed that the indicated preference is dedicated only to small taxpayers, i.e.
taxpayers whose value of the sales revenue (including the amount of tax due on goods and services) did not exceed in the preceding tax year the amount of PLN equivalent 2,000,000 EUR, and taxpayers who start their business, because these entities, usually have the greatest difficulties in raising capital.
According to the Ministry of Development, this change is expected to have a positive impact on the development of economic activities, including the level of investments made and on domestic and foreign competitiveness.
The planned date of entry into force of the above preferences is the beginning of the year 2021.
A new form of CIT taxation for micro and small entrepreneurs – the Estonian tax
The National Reform Programme also provides a favourable solution for micro and small entrepreneurs only. According to the Project, it is planned to introduce a new form of taxation in the Corporate Income Tax Act.
The new form of taxation means to introduce the possibility of accumulation of own investment capital and thus limiting the need for external financing - it is important to note the convergence of the proposed solution with the solution which has been applied for many years and has been positively assessed in Estonia.
In the "Estonian" model, micro and small entrepreneurs would be obliged to pay tax only at the time of the payment of profits, e.g. in the form of dividends. Thus, until an entrepreneur reinvests profits continuously, he would not pay the tax. At this point in time, in the current state of the law, the CIT tax is regulated on the profit generated in a given year.
The planned date of introduction of the indicated form of taxation is the beginning of the year 2021.
Relief for robots
The last of the tax solutions proposed in the National Reform Programme is the introduction of a reduction for robots.
This relief will include, among others, expenditure on the purchase of robots, cobots, additive production equipment, i.e. 3D printing, software used for design or production, integration of production equipment, sensors, extended and virtual reality devices used for design, production or processing. Moreover, it will include digitally controlled production machinery and the costs of the temporary use of such equipment under contract.
The relief will be addressed to all entrepreneurs, regardless of the size of their business.
The aim of introducing a reduction for robots is to increase the use of new technologies in business activities, transforming Polish industry towards industry 4.0, and increase the mobilisation of entrepreneurs to invest in new technologies.
Higher revenue limit to benefit from flat-rate taxation of revenues
Another solution proposed under the National Reform Programme is to increase the revenue limit to benefit from flat-rate taxation for certain individual economic activities.
The flat-rate taxation of revenues is a simplified form of taxation which can be applied, inter alia, by natural persons conducting business activities, which generate revenue from rental, sub-rental, lease, sub-rental, clergy, or in connection with obtaining income from the company in decline.
Currently, according to Article 6(4) The flat-rate income tax Act on certain income generated by natural persons, taxable persons shall pay in the tax year a flat-rate on registered revenues from activities if, in the year preceding the tax year:
- they obtained revenue from this activity, carried out alone, not exceeding 250,000 EUR or
- they obtained revenue exclusively from activities carried out in the form of a company, and the sum of the revenues of the shareholders of the company did not exceed the amount 250,000 EUR,
- will start operating in the tax year and do not benefit from taxation in the form of a tax card - regardless of the amount of revenue.
According to the National Reform Programme, the limit on the revenue to be taxed in the form of a lump sum will ultimately be 2,000,000 EUR. The planned change is to enter into force in two stages, i.e. at the beginning of the year 2021 the limit will be increased to the amount 1,000,000 EUR, in the year 2022 to the final amount 2,000,000 EUR. Thus, it should be noted that the current limit would be raised eight times in the end.
As the Ministry of Development emphasises, the increase in the limits is intended to encourage taxpayers to take up and develop economic activities and thus to minimise the concerns of entrepreneurs that any initiative to develop them will result in a loss of the right to a simplified method of taxation of the revenues achieved.
It should be noted that the Ministry of Development stressed that the proposed solutions were formulated in the middle of March, i.e. in a different socio-economic situation. In view of the above, the way and time-limit for the implementation of these tax improvements depends on developments in Poland and the world, due to the ongoing pandemic. The timetables for these actions should therefore be considered indicative.