Amendment to income tax, VAT and the Tax Code adopted by the Sejm
On 6 May 2020, the Sejm passed an amendment to the Corporate Income Tax Act (CIT Act), the Personal Income Tax Act (PIT Act), the Flat-rate Income Tax and Tax on Goods and Services Act (the VAT Act) as well as the Tax Code. The bill will now be considered by the Senate, at the moment it is examined by the Budget and Public Finance Committee.
Presented below are the major changes resulting from the bill.
Amendments to the “white list” of VAT payers
The amendment provides that starting from 1 July 2020, restrictions on joint liability for VAT, and on the possibility to recognise a cost as deductible if not paid to an account included in the “white list”, will not apply also in situations where the payment:
- was made using the spit payment mechanism – this provision is to apply also if the split payment was made in the period from 1 January 2020 and 30 June 2020.
- results from an invoice which documents transactions of intra-Community acquisition of goods, imports of goods, imports of services or supply of goods settled by the buyer.
- was made by transfer to a bank account or an account of a loan and savings union:
- used to settle cash claims acquired by the bank or the loan and saving union (the so-called assignment account) or
- used by the bank or the loan and savings union to collect amounts due from the buyer of goods or service provider for supply of goods or provision of services, confirmed with an invoice, and transfer all or some of it to the supplier of the goods of provider of the services, or
- maintained by the bank or the loan and savings union within the scope of its own management, other than a settlement account
– if the bank, the loan and savings union or the invoice issuer, as appropriate, while informing about the account number, provide the taxpayer with information that the account indicated for payment is the one referred to in any of the preceding subsections.
Additionally, the deadline for submission of the notification of payment of the amount due to an account not included in the white list (ZAW-NR) is to be extended from 3 to 7 days (the recently implemented special anti-crisis law extended the deadline to 14 days only during the epidemic or epidemic threat)
Moreover, after the amendment enters into force, the notification will be submitted to the head of the tax office competent for the taxable person who makes the payment, rather that to the head competent for the invoice issuer, which was the case to date, and it will be submitted on a one-off basis upon the first payment of the amount due to the account. The principle of single submission of the notification has previously been indicated in the guidance of the Minister of Finance concerning the white list, but now it is actually expressed in the regulations.
Special anti-tax-avoidance clause
Based on the amendment, a regulation is to be added to the CIT Act intended to limit the right to increase tax costs by hypothetical costs of acquiring capital from contributions or retained profits, if such measures are taken primarily to derive a tax benefit.
Consequently, the costs cannot be recognised as deductible costs if the taxpayer or its affiliates perform economically unjustified operations to make deduction of such costs possible in the income tax statement.
Changes to IP Box
The amendment will also apply to the IP Box, i.e. preferential taxation of income from qualified intellectual property rights, and will apply to income earned from 1 January 2021, although in this case the changes are to intended to make the regulation more precise:
- it was specifically provided that income and loss from a qualified intellectual property right should be determined according to the rules laid down in Article 7(2) of the CIT Act (Income from a source of revenue is the surplus of the sum total of revenues earned from this source of revenue over deductible costs derived in the tax year. If deductible costs are higher than the sum total of revenues, the difference constitutes a loss from the source of revenue.
- it was added that the market price will also need to be used to determine a loss from a qualified intellectual property right.
Adaptation of the income tax law to the Polish Classification of Goods and Services (PKWiU) 2015
1 January 2016 marked the effective date of the regulation implementing a new classification of goods and services – PKWiU 2015. However, with respect to the provisions of the PIT act, the flat-rate personal tax act and the CIT act, the previous version of the PKWiU 2008 still applies.
The amendment is to supersede references to PKWiU 2008 with references to PKWiU 2015 starting from 1 January 2021 (in practice, with respect to the CIT Act, the change will apply to classification of sea transport fleet under construction based on PKWiU 2015, and greater changes in this respect will apply to the PIT Act).
This change is intended to assign new symbols and statistical groupings, with no substantive changes to the tax regulations and no change of the tax status of taxable persons, which means that the change is technical and should not affect the situation of taxpayers of the income taxes in any way whatsoever.
APA report becomes a tax return
Due to doubts concerning the legal nature of reports on implementation of advance pricing arrangements, the amendment extends the list of documents recognised as a tax return within the meaning of the Tax Code to include the report.
Micro-accounts for taxes
The amendment provides for the possibility to pay all taxes, dues and non-taxed budget receivables to the so-called tax micro-account (starting from this year, the micro-accounts are used to pay PIT, CIT and VAT). However, the specific amounts due which are to be paid to the micro-account will each time be determined by the Minister of Finance in a regulation. There are plans that in the nearest future this obligation will apply to the excise tax and the mining tax on certain minerals.
Should you have any questions or doubts regarding the issues discussed here, we are ready to assist you.
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