It is 14 December 2020. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
In today's episode:
- Amendments to the decrees on transfer pricing documentation in CIT and PIT
- Fast-approaching launch of the Financial Information System
- Retail sales tax to enter into force on 1 January 2021
- New rules on WHT collection further suspended
- Publication of CJEU's judgment on the application of bad-debt relief in VAT
- Fee on offshore wind farms
- PIT-free flu vaccines
Amendments to the decrees on transfer pricing documentation in CIT and PIT
On 7 December 2020, draft decrees amending the decrees on transfer pricing documentation in CIT and PIT were published. The draft decrees provide for extending the scope of the Local File with business justification for direct and indirect transactions with entities having their place or residence, seat or place of management in a tax haven, i.e. a country employing harmful tax competition. The justification shall include, in particular, description of the expected business and tax benefits, with the primary goal of explaining economic reasons behind the taxpayer's entering into transaction with an entity from a country encouraging abusive tax practices. New obligations are expected to enter into force on 1 January 2021.
Fast-approaching launch of the Financial Information System
On 4 December 2020, a draft bill on the Financial Information System was published. The purpose of the system is to collect, process and share information on open and closed bank accounts, bank credit unions accounts, payment accounts in other entities, securities accounts, omnibus accounts along with cash accounts used to operate them, and agreements on the provision of safe deposit boxes. Such information will be then used to screen for accounts that can be used for criminal activities, to track down assets in connection with ongoing proceedings of services, courts and other public authorities, and to tighten control over the services' activities related to collecting information on accounts. The bill is to be approved by the Council of the Ministers in Q1 2021.
Retail sales tax to enter into force on 1 January 2021
The Ministry of Finance confirmed that it does not intend to further delay the entry into force of the new retail sales tax, which means that the new levy, due from retailers and covering revenue from retail sales, is to enter into force on 1 January 2021. It should be noted that in her opinion issued on 15 October 2020, Juliane Kokott, Advocate-General of the Court of Justice of the European Union, stated that the Polish tax on retail sales does not infringe the EU law. CJEU's judgment in this case should be issued in early 2021.
New rules on WHT collection further suspended
Publication of CJEU's judgment on the application of bad-debt relief in VAT
On 7 December 2020, the judgment of the Court of Justice of the European Union of 15 October 2020 in the Polish case related to bad-debt relief in VAT was published in the Official Journal of the European Union (2020/C 423/10). CJEU ruled that the Polish legislation which makes the reduction of the VAT taxable amount subject to the condition that, on the day of the delivery of the goods or provision of the services and on the day preceding that on which the adjusted tax return seeking that reduction is filed, the debtor is still registered as a taxable person for the purposes of VAT and is not subject to insolvency or winding up proceedings and that, on the day preceding that on which the adjusted tax return is filed, the creditor is itself still registered as a taxable person for the purposes of VAT is incompatible with the provisions of EU VAT Directive. Publication of the judgment means that the deadlines for submitting an application for stating and reimbursing VAT overpayment in relation to the judgment have started to run. Taxpayers who submit such an application within 30 days from the date of publication of the CJEU's judgment will be granted interest on the entire period, starting on the date of tax payment, ending with the date on which the overpaid tax will be reimbursed. In the case of taxpayers who submit their application later, interest will be included only up to the 30th day from the date of publication of the judgment.
Fee on offshore wind farms
On 3 December 2020, the government bill on promoting electricity generation by offshore wind farms was submitted to the Lower House of the Polish Parliament. Pursuant to the bill, an energy sector company granted a license to generate electricity via offshore wind farm will be charged an additional fee, payable to the State budget annually. The amount of the fee will be the product of the installed capacity of a wind farm expressed in MW and the appropriate ratio specified in a decree issued under the Polish Energy Law, in the maximum amount of PLN 23k/MW. According to the bill, the goal behind introducing a new fee is to ensure that the tax system in force will not influence decisions on the choice of RES-based power generation technology.
PIT-free flu vaccines
The decree of the Minister of Finance, Development Funds and Regional Policy of 2 December 2020 on waiver on personal income tax on the value of fringe benefits in form of flue vaccination was published in the Polish Journal of Laws. Pursuant to the decree, from 1 March 2020 until the end of the month in which the state of the epidemic announced in the territory of the Republic of Poland in connection with COVID-19 is revoked, collection of PIT will be waived on the value of fringe benefits in form of protective flu vaccination, constituting revenue from employment relationship, equivalent revenues earned from the exercise of a freelance profession and the so-called revenue from other sources. The decree entered into force on the day following its publication, i.e. on 8 December 2020.