On 26 March on the website of Polish Sejm a draft act amending the act on special arrangements related to preventing, counteracting and combating COVID-19, other infectious diseases, and resulting states of emergency, and certain other acts was published. The draft act will be considered by the Sejm this week.
The authors of the draft act have provided for comprehensive changes to a number of acts, and introduced a range of options for businesses to benefit from the State aid as well as a change to
currently binding tax regulations.
Below we present you our selection of crucial propositions. Please be informed that the basis for the below summary was a draft act, thus the final version of the documents may vary.
Changes in income taxes (PIT and CIT)
- The deadline for submitting a notification of payments made to bank accounts other than those indicated in the so-called “white list” – ZAW-NR – will be postponed until the14th day of the bank transfer order.
- For taxpayers who started fiscal year after 31 December 2018 and finished before 31 December 2019, the deadline for submitting transfer pricing information will be postponed until 30 September 2020.
- Taxpayers who will incur tax loss in 2020 and generated in the current year revenue lower by at least 50% compared to the revenue generated in 2019, are entitled to make a one-off offset of the loss incurred in 2020 (not exceeding PLN 5m) against the revenue generated in 2019.
- Taxpayers will be able to deduct from their taxable income donations granted to given entities providing healthcare in the period from 1 January 2020 until 30 September 2020 for the purpose of counteracting COVID-19, however, in case of donations granted:
- before 1 May 2020 – the deduction equals 200% of the donation granted,
- before 1 June 2020 – the deduction equals 150% of the donation granted.
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- The deadline for paying the so-called minimum tax has been postponed until 20 July 2020 (on revenue from buildings) for months from March to May 2020, if the taxpayer:
- suffered adverse economic effects due to COVID-19 in a given month,
- generated revenue lower by at least 50% compared to the same month of the previous year.
- The so-called “bad debt relief” – debtors will not be obliged to increase the basis for calculating the tax advance from the amount of outstanding invoices, if:
- they suffered adverse economic effects in a given fiscal period due to COVID-19,
- revenue generated in a given fiscal period is at least 50% lower than the revenue generated in the same period in the previous year.
- Taxpayers being small taxpayers who have opted for the simplified method of making advance payments, may quit its application during the year.
- Taxpayers are entitled to make one-off write-offs of the initial value of fixed assets acquired for the purpose of manufacturing goods with the intention to counteract COVID-19.
- Costs qualifying for the R&D relief may be accounted when calculating the basis for calculating tax advances – i.e. during the year – if the R&D activities have been carried out for the purpose of developing products necessary for counteracting COVID-19. Also a reduced 5% rate resulting from the regulations on IP Box will be applicable to monthly income tax advances if the income has been generated from eligible intellectual property rights used for the purpose of counteracting COVID-19.
Changes in PIT
- The following allowances received or made available to the taxpayer will be exempt from income tax in 2020:
- idle time pay,
- accommodation and maintenance allowances specified in the COVID-19 Act.
- Deadline for remitting tax advances deducted in March and April 2020
from revenue received under service relationship, employment relationship, outwork or cooperative work relationship and from financial allowances paid out from the social insurance by withholding agents will be postponed until 1 June 2020 if the withholding agents suffered adverse economic effects due to COVID-19.
Changes in VAT
- The obligation for large enterprises to submit new JPK_VAT files will be postponed until 1 July 2020.
- New tax rate matrix will be effective as of 1 July 2020.
- Also as of 1 July 2020, the so-called binding effect will come into force together with the protection of taxpayers under the Binding Rate Information.
Changes in Tax Ordinance
- Application for payment of tax or tax arrears in instalments or for deferring the payment of instalments will not require the payment of the so-called extension fee.
- Time limits for issuing individual tax rulings will be extended by 3 months.
- Deadlines for MDR reporting obligations will be suspended until 30 June 2020.
Social insurance contributions relief
- If the deadline for remitting social insurance contributions due as of 1 January 2020 has been postponed, the extension fee will not be charged.
- At the taxpayer’s request, they will be exempt from the obligation to remit social insurance contributions, health insurance contributions, contributions to the Labour Fund, Solidarity Fund, Guaranteed Employee Benefits Fund, Bridge Pension Fund, due for the period 1 March 2020 – 31 May 2020, on behalf of individuals conducting non-agricultural activities and persons cooperating with them, on behalf of employees and individuals performing work under agency agreements, contracts of mandate, other contracts for the provision of services, to which, pursuant to the Act of 23 April 1964 – Civil Code, the provisions on mandate apply, and persons cooperating with them, however, the exemption may be claimed on condition that the withholding agent:
- conducts business activity,
- conducted business activity before 1 February 2020,
- runs a micro-enterprise,
- does not benefit from other forms of business aid,
- generated revenue from non-agricultural activities not exceeding 300% of the projected monthly gross salary.
- The Minister of Finance may, by a regulation, set other deadlines related to financial statements.
- During the state of emergency or epidemic some civil and administrative law time limits will be suspended.
- The effective date of the regulations on retail sales tax will be postponed until 1 January 2021.
- A District Governor (starost), under a contract with a business entity, may cover a portion of costs of employee salaries and due social insurance contributions if the business suffers a fall in turnover due to COVID-19.
- Persons conducting business activity or working under a civil-law agreement will be entitled to the idle time pay.
- A business suffering lower turnover due to COVID-19 may apply for the allowance for the protection of workplaces, disbursement of funds from the Guaranteed Employee Benefits Fund for covering the cost of salaries of employees during the economic idle time or reduced working time, on the following conditions:
- A business is entitled to the funds accumulated under the Guaranteed Employee Benefits Fund and fulfils the criteria specified in the Act on special arrangements related to the protection of workplaces, and is not in default of tax and contribution payments for the period until the end of the third quarter of 2019;
- Funds are disbursed during the idle time or reduced working time;
- The employer pays 50% of the remuneration, yet not less than the minimum remuneration;
- The remuneration is co-financed in the amount of 50% of the minimum remuneration by the Guaranteed Employee Benefits Fund;
- Fall in turnover shall be deemed a decline in sales:
- of at least 15%, calculated as a ratio of total turnover generated during 2 consecutive calendar months falling after 1 January 2020, chosen at own discretion, to the same period in 2019,
- of at least 25%, calculated as a ratio of the turnover generated during one calendar month in 2020, chosen at own discretion, to the same period in 2019.
Additionally, please be informed that on 26 March 2020 the Government Legislation Centre published on its website a draft regulation of the Minister of Finance postponing the deadline for submitting CIT-8 returns and tax payments until 31 May 2020. As it has already been announced by the Ministry of Finance, the deadline for submitting financial statements will also be postponed.
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