Planned CIT and PIT amendments to take effect on 1 January 2021
CIT imposed on limited partnerships and other changes
The Ministry of Finance is currently working on a bill of amendment to the CIT and PIT Acts, intended to seal the tax system. At the moment, no bill or explanatory memorandum exist. Assumptions for the bill have been published on the government website.
- CIT imposed on limited partnerships and some registered partnerships
The Ministry of Finance is of the opinion that limited partnerships are used for tax optimization and profit transfer to tax havens or countries of harmful tax competition.
The tax is to be imposed on income earned by the passive investor only, i.e. the limited partner (“silent partner”) who is not disclosed in the National Court Register and whose liability is limited to the commendam sum. General Partners, i.e. the partners liable with all their assets, are to be entitled to deduct the CIT paid by the partnership from their taxes.
For registered partnerships, CIT taxation will apply if the beneficiary owners are not disclosed. The new regulations are to provide partners in registered partnerships with the possibility to verify the accuracy of tax settlements made by the partnership.
- Selected CIT taxpayers obliged to prepare and publish the tax policy and to publish transfer pricing changes
The changes are aimed at greater transparency of taxpayers in relations with tax authorities and counterparties.
- Restriction of the possibility to modify depreciation rates for entities benefitting from tax exemption
The planned regulations prohibit reduction of depreciation rates for taxpayers who benefit from a tax exemption e.g. those who operate in special economic zones and the Polish Investment Zone.
The other changes include:
- transfer of the obligation to settle tax from sale of shares in real property companies from the seller to the real property company
- restriction of the possibility to account for tax losses by taxpayers who have taken over assets of other entities which form an enterprise or an organized part of an enterprise as a result of combination, in-kind contribution or a purchase financed with cash contribution.
- taxation of property division of a legal person subject to liquidation
- change of the rules for calculation of the limit of interest and debt financing costs recognizable as deductible
- adjustment of the definition of sources of income earned by non-residents in Poland to the standards of double taxation avoidance agreements;
- increase of the limit on income eligible to 9% CIT to EUR 2 million
- cancellation of the tax abolition relief for PIT taxpayers who account for income tax from business activities
- extension of the right to benefit from tax exemption on income from buildings if the threat of epidemic continues after 31 December 2020.
If you are interested in the above issues or in training on planned changes in legislation, please contact us.