RSM Poland


Controversial regulation on correcting costs repealed

On 5th August 2015, Polish President Bronisław Komorowski signed an amendment to the tax law, introducing the much anticipated in dubio pro tributario principle (doubts to be resolved in favour of the taxpayer) and repealing the troublesome obligation to provide a correction of tax-deductible expenses due to unsettled liabilities.

The regulation requesting entrepreneurs to provide an expense correction for unsettled liabilities will be removed entirely, both from the provisions of the Act on corporate income tax and of the Act on personal income tax.

The reason behind the law from two years ago was to decrease payment backlogs between entrepreneurs that had been on the rise. The law was intended to help out the smallest and most vulnerable business entities by discouraging purchasers from breaching agreed due dates or forcing extended terms of payment. Due to its vagueness, faulty structure and an exceptionally punitive approach, the regulation failed to have any positive impact on the situation of Polish entrepreneurs. In reality, entrepreneurs were forced to accept additional costs for accounting and registration purposes; they were also the ones to bear the risk.

The cumbersome regulation is, however, set to become redundant on 1st January 2016 - although the Act does mention transitional provisions. Taxpayers who by the end of 2015 will have their tax-deductible expenses corrected or whose revenue will increase due to unpaid invoices are entitled to retain their right to increase tax-deductible expenses once pending liabilities have been settled.

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