In 2021 Estonian CIT will become applicable in Poland. Companies will not pay tax in monthly/quarterly advance or settle annually. They won't pay him until the profit is paid. See if your company qualifies for this form of settlement.
The Estonian tax is one of the solutions announced in the National Reform Programme for the introduction of 2020, with planned entry into force from 2021.
Today in the middle 2020, The draft legislation has not yet been put forward for discussion, but the Ministry of Finance maintains its intention to introduce such a form of taxation from the outset 2021.
Despite the lack of a formal draft law, the MF proposes to taxpayers a solution to the survey from which they can learn whether this announced income tax system can be applied to their company.
The survey is simple with several questions, based on the current planned conditions for the application of taxation in the formula of the Estonian CIT. Already on the first page of the survey, it appears that “the criteria indicated may be changed in the course of the project”.
After completing the survey, a summary showing the respondent's responses indicating whether it meets the expected conditions (answers where the condition is fulfilled are marked in green, the remaining red) and, in fact, the whole survey, the result can still be printed.
The question remains what is the purpose of the tool, which allows to explore the potential possibility of applying a legal solution for which the bill has not even been published yet.
This type of action could be motivated by the intention to explore the scope of the proposed solution, but this is unlikely to happen in this case, since this scope is easy to establish and known to the legislator, especially since information materials are published on the same government portal, according to which the Estonian CIT is to concern 200,000 companies in Poland.
The survey also does not collect any data that could be used in the course of the draft legislation, as it does not raise questions about the needs of respondents for presented or variant solutions.
This is not a formal public consultation, as such can only be carried out during the legislative process and may concern projects made public.
Thus, the survey presented by MF serves only information and promotional purposes – MF informs that it is working on a new solution and presents what are the most likely conditions for this solution and that the use of the survey may increase the range of recipients to whom such information will arrive in early July, for many people just before the beginning of the holiday season. Perhaps this will help some to spend their vacation in a more pleasant mood, given the beneficial tax arrangements that await them (probably) already in 2021.
What the new solution will be
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. In the ‘Estonian’ model, there will be no obligation to pay advance payments during the year or to pay tax on the basis of an annual declaration, until the company decides to pay profits to shareholders.
For whom the possibility of this type of settlement is expected
Estonia's CIT is addressed to limited liability companies and public limited liability companies, which, at the same time, account for the level of revenues of small or medium-sized companies, i.e. their annual income does not exceed 50,000,000 PLN. In addition, they must meet the following cumulative conditions:
- they do not have any shares in other entities,
- employ at least 3 employees - in addition to shareholders,
- their liabilities do not exceed the operating income,
- show investment outlays.
The solution is attractive – in Poland most companies are small or medium-sized companies and the need to tax even small incomes, which often manages to develop after many months and sometimes years of investment, is a factor that slows down development and can discourage this form of activity.
Secondly, since the announcement of such a solution at the end 2019 to date, little has changed as regards the basis for this solution, if this tax system is to apply from 2021 - the present key aspect is the presentation of a specific draft legislation, which will be subject to the legislative process, including public consultation, which may allow for an effective and well-functioning tool.
The survey is currently available at:
https://www.podatki.gov.pl/estonski-cit/
Author:
Leszek Dutkiewicz, partner of Russell Bedford Poland. Associated with the company from 2011. Director of RBP office in Katowice. In years 2008 – 2011 worked for leading consulting companies (Ernst&Young, KPMG, BDO) providing tax advisory services.
He specializes in tax and economic law, primarily in international tax law, tax proceedings, VAT and transaction prices. Author of a publication on tax, civil and international law issues. Lecturer in tax law training. He has legal education, in 2008 graduated from the Faculty of Law and Administration of the Jagiellonian University.