Tax news - page 5

On 14 November 2018 the Constitutional Court announced its final verdict on the amendment to the Social Insurance System Act of 14 November 2018.

In newsletter 9/2018, we informed you about the planned changes in transfer pricing. Now it is a fact: on 14 November 2018, the President signed the Act of 23 October 2018 amending the Personal Income Tax, Corporate Income Tax, Tax Ordinance Act and certain other acts. In the newsletter below we are going to summarise the regulations that have been introduced.

On 24 August 2018, the Ministry of Finance published a draft act amending the Personal Income Tax Act, the Corporate Income Tax Act, the Tax Ordinance Act and certain other acts (hereinafter referred to as the “Draft Amendment”). In the present article, we will focus on the most important planned changes in the Corporate Income Tax Act (hereinafter referred to as the CIT Act), as they can be approached from two perspectives. On the one hand, the Draft provides for considerably simplified procedures and introduces new tax incentives, and on the other hand, it introduces significant restrictions and difficulties for Polish entrepreneurs while boosting tax revenues in an effort to make the tax system more efficient.

The Ministry of Finance published draft legislation that introduces, among others, the ‘exit tax’ to the Polish taxation regime. The point is to tax unrealised capital gains as company’s assets, permanent establishment or tax residence is moved to another country.

On its website the Ministry of Finance has published the long-awaited tax explanations about the application of the mechanism of split payment between value added taxpayers. We should remember that as of 1 July 2018 entrepreneurs are entitled (but not required) to make payments with the use of this type of settlement system.

The latest draft act, amending the Acts on Income Taxes and Certain Other Acts, published on 16 July 2018 is a harbinger of many comprehensive changes in transfer pricing. Less red tape and many simplifications for taxpayers are the principal goals the legislator had in mind. The draft act is now under public consultation, therefore its final wording is yet unknown.

As of 1 July 2018, filing of the Standard Audit File for Tax (SAF-T, in Polish abbreviated as JPK) shall applyy to all taxpayers – entrepreneurs keeping their books in electronic format.

The split payment is a mechanism which was introduced in the Polish legal system with the Value Added Tax Act Amendment Act of 15 December 2017 (Journal of Laws of 2018 item 62), based on solutions used in other European countries (Czech Republic, Turkey, Romania, Italy). However, Polish solution is innovative in many aspects, using solutions that were not yet attempted elsewhere. For this reason in the first phase of operation the split payment system will be voluntary, and the Finance Ministry will be monitoring the effects of its introduction (not only fiscal impacts, we hope).

The Ministry of Finance has published “The methodology of evaluating due diligence compliance by buyers of goods in domestic transactions” (hereinafter referred to as the “Methodology”) on its website.

As of January 2018, new rules have been in force on the so-called minimum tax on commercial real estate. The Ministry of Finance is currently working on the introduction of changes to that tax, which are the result of consultations between the Polish government and the European Commission (hereinafter: EC).