Proposed changes in Polish income tax law for 2021 - first draft made public
Polish government published on September 16th draft of the changes in the income tax. Here is brief summary of the main points of the proposal which is now being discussed with the public (although with a extremely short deadline of 3 days!).
- limited partnerships (spółki komandytowa) are going to be corporate income taxpayers (now are transparent and only partners are taxed)
- large taxpayers (EUR 50m+), tax capital groups and real estate companies are going to be obliged to publish its “tax strategy”; while the definition is not provided this will include basic information about DAC-6 reporting, tax rulings received, transactions with tax havens but as well some more sophisticated one like planned/implemented restructurings and policies aimed at securing proper tax reporting. Crido’s experience (e.g. from preparations of the clients to Polish test version of co-operative compliance programme) shows that preparing such strategy may be burdensome and should be prepared in advance
- threshold to benefit from lower (9%) tax rate for “small taxpayers” is raised up to EUR 2m (from EUR 1.2m)
All kinds of new obligations will be imposed on real estate companies (REC):
- the most controversial is obliging REC to remit income tax due on the foreign direct/indirect shareholder selling the shares of the Polish REC; the proposal does not tackle any of obvious issues like how the REC is to get cash for meet the obligation, how REC can know about some operations (especially with indirect shareholders selling) or how the REC can calculate the tax due not knowing the acquisition costs or sell price;
- RECs and their shareholders are to provide information to tax office about it direct and indirect (!) shareholders;
- REC which does not have board / seat in in Poland will have to act through tax representative (tax advisor or accounting firm);
- REC are to publish its “tax strategy”.
There are some other minor changes in the area of tax depreciation (especially for taxpayers in special economic zones), liquidation (in-kind liquidation proceeds are going to be taxed at the liquidated entity) or limiting right to use losses (when acquiring going concern or changing the business).
There are also some changes proposed for transfer pricing compliance obligations:
Relaxation of the compliance obligations (if the Polish taxpayer was affected by COVID-19):
- if there was a TP adjustment made for a related party transaction by a Polish taxpayer, there is no obligation to have a statement from counterparty confirming they also made the same adjustment
- domestic transactions are exempt from TP compliance obligations, even if the taxpayer incurred the tax loss, but their revenues dropped by at least 50% due to Covid
- TP statement confirming that the transfer prices were at arm’s length does not have to be signed by the full representation of the taxpayer, but only by one person representing the taxpayer (eg. one board member instead of the full board)
Strengthening of the TP compliance provisions relating to transactions with tax havens:
- All transactions with tax havens exceeding the amount of PLN 100k will be subject to TP documentation, if the beneficial owner is seated in the tax haven
- The TP documentation for transactions with tax havens will have to include an economic justification of the transaction, in particular a description of expected economic benefits, including tax benefits
Please note that the government still declares to propose also changes in the WHT rules (with more lenient approach to some obligations) but this has not been published yet.
Shortly we will be hosting a webinar in English covering details of the abovementioned changes – we will circulate additional information on that in a separate e-mail.
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