Will there be changes to CIT? The government’s plans include postponing the entry into force of minimum income tax provisions

Amending and postponing the application of the minimum income tax provisions within the scope of the Communications and Information Technology Law is stipulated in the draft Cabinet decision, which is included in the list of legislative acts of the government.

In the list of legislative and programmatic works of the Council of Ministers, it was announced on Monday that work had begun on a bill amending the corporate income tax law and some other laws.

As mentioned, within the scope of the CIT Act, the bill provides for the amendment and postponement of the entry into force of provisions on the minimum income tax.

He explained that, inter alia, to suspend the application (exemption) of the provisions of Art. 24ca of the CIT Act in a period of one year, i.e. from January 1, 2022 to December 31, 2022. As part of the protection of Polish companies from the possible negative consequences of the entry into force of this tax in political and economic conditions, the disruption affects the global economy and, accordingly, the entities operating in it – added.

The draft also provides for changes in the structure of the tax itself. It was pointed out that it was in particular an increase, to 2 percent. Profitability ratio, with a change in the methodology for its calculation (including excluding fixed asset rental costs from taxes, excluding the value of trade debtors sold to entities of the factoring industry, excluding the value of excise tax).

The draft also provides for a change in the date of updating individual taxpayer data. As indicated, this solution (listed in Section 27b(8) of the CIT Act) is to simplify the entire process of updating individual data for taxpayers.

This is achieved by abandoning the quarterly update of the data disclosed to major taxpayers in favor of the annual update. After the change, the update will be made by September 30, from the first day of the month preceding the month in which the data of individual taxpayers will be published (i.e. as of August 1) – indicated.

The project also provides for a change in the provisions on taxes with the tax on transferred income, for example by covering the scope of the tax on transferred income only costs classified as deductible costs.

As we have explained, this proposal aims to remove the doubts raised by entrepreneurs.

Finance Minister Artur Suboy said that the ministry wants to suspend the minimum CIT for a year and propose a new solution from 2023. “There will be a different tax base, more understandable for entrepreneurs, a different way of calculating the profitability ratio, taking into account the specificity of different costs. It comes For example, taking into account the increased costs of energy, wages and salaries, taking into account the peculiarity of factoring, leasing or purchase of goods subject to excise tax, which affects the level of realized margins ”- explained when asking about the planned solution.

Soboń announced that the Ministry of Finance is also proposing, inter alia, to repeal provisions on hidden profits. “This is a very beneficial change for entrepreneurs. In terms of transfer pricing, we want to simplify the rules governing the documentation of Paradise transactions and raise the documentation thresholds applicable to them,” he declared.

Asked if there will also be changes to the Estonian CIT, he stated that the main assumptions of this solution will not be modified, while detailed regulations that raise doubts or practical problems will be improved.