It is 4 January 2021. 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:
- Income tax changes for 2021
- Entry into force of the retail sales tax
- Tax on sugary drinks and alcoholic beverages sold in bottles of up to 300ml entered into force
- Changes in the jurisdiction of tax authorities
- Slim VAT package entered into force
- New rules on WHT collection further suspended
- The EU–UK Trade and Cooperation Agreement
- A bill instituting e-Tax Office
Income tax changes for 2021
On 1 January 2021 a raft of amendments to CIT and PIT provisions entered into force. One of the major amendments, applicable as of 1 January 2021, is the extension of CIT obligations to limited partnerships and certain general partnerships. Furthermore, the amendments impose on the largest CIT payers a requirement to prepare and publish a report on the tax strategy executed in the given tax year. Other amendments relate to settlement of tax on the sale of shares in real estate companies, extending the scope of tax documentation for transactions with related entities, and the limitation of the abolition relief in PIT. Furthermore, the amendments entered into force on 1 January 2021 introduce an alternative taxation scheme dubbed "Estonian CIT", providing taxpayers (who meet specific conditions) with the possibility to pay income tax only when they decide to distribute the company’s earning. The Estonian CIT scheme may be applied only by companies meeting a number of criteria, their shareholders are only natural persons and they do not hold shares in other entities. The regulations also require increase in capital expenditure.
Entry into force of the retail sales tax
On 1 January 2021, the new retail sales tax became applicable. The new tax will be imposed on retailers, with the tax base will being the surplus of revenues from retail sales over PLN 17m earned in a given month.
The retail sales tax rates will be as follows:
- 0.8 percent of the tax base, from the excess of revenue not exceeding PLN 170m;
- 1.4 percent of the excess of revenue exceeding PLN 170m.
Tax on sugary drinks and alcoholic beverages sold in bottles of up to 300ml entered into force
On 1 January 2021, the Act on the amendment of certain acts in connection with promotion of healthy consumer choices entered into force. The Act provides for a surcharge on beverages containing sugars and alcoholic beverages sold in bottles of up to 300ml. According to the new provisions, the surcharge shall amount to PLN 25 for each litre of 100 percent alcohol sold in bottles of up to 300 ml in volume. A fee on sugary drink is a sum of the fixed and the variable component. The fixed component amounts to PLN 0.50 per litre for beverages containing sugars or substances used for their sweetening properties and PLN 0.10 per litre for beverages containing caffeine and/or taurine. In turn, the variable component of the fee shall amount to PLN 0.05 for each gram of sugar above 5g/100ml, expressed per litre. An exemption from the fee applies to: medical devices, registered dietary supplements, food for special medical purpose, infant formulas and excise goods. Moreover, beverages in which the mass proportion of fruit, vegetable or fruit/vegetable juice constitutes not less than 20% of ingredients and isotonic drinks are exempt from the fixed fee.
Changes in the jurisdiction of tax authorities
As of 1 January 2021, competence of the Polish tax offices has been modified. At present, legal persons or organizational units without legal personality which, as part of their business activities carried out in the given tax year, achieved net revenue from the sale of goods, products and services exceeding EUR 50 million (excluding taxpayers and remitters conducting business activity under private partnership), as well as listed companies, banks, insurance and reinsurance companies, along with tax capital groups and their member companies located in Poland will be serviced by the First Mazovian Tax Office in Warsaw. In turn, legal persons or organizational units without legal personality which, as part of their business activities carried out in the given tax year, achieved net revenue from the sale of goods, products and services exceeding EUR 3 million, but below the cap of EUR 50 million (excluding taxpayers and remitters conducting business activity under private partnership), as well as cooperative banks, local government units, foreign companies and branches or representative offices of foreign companies (except for natural persons) who in a fiscal year earned revenue exceeding EUR 3 million, are under the jurisdiction of nineteen "large" specialized tax offices, operating in individual voivodships (with two offices in Mazowieckie, Śląskie and Wielkopolskie respectively). The head of the Tax Office in Lublin will provide all taxpayers and remitters with services related to flat-rate corporate income tax collected by remitters from non-residents (withholding tax).
Slim VAT package entered into force
On 1 January 2021, a suite of amendments to the Polish VAT Act and the Banking Act, commonly referred to as 'the Slim VAT Package', entered into force. The amendments provide for, inter alia, elimination of the obligation to obtain confirmation of receipt of a correcting invoice, extension of deadline for the export of goods to apply the zero percent rate by exporters from 2 to 6 months as well as increasing the limit of low value gifts from PLN 10 to PLN 20 and introduction of a possibility of deduction of VAT on the purchase of accommodation services for resale. Moreover, taxpayers will now have the possibility of using currency conversion rates for VAT purposes according to the rules applicable under the provisions on income tax. The Act also provides for introduction of a 5-year period validity of the Binding Rate Information and introduction of an all-electronic billing system and supervision over the issued TAX-FREE documents along with the VAT refunds obtained by travellers.
New rules on WHT collection further suspended
New rules on WHT collection in PIT and CIT were further suspended, until the end of June 2021. The suspension relates to the provisions under which PIT and CIT payers who make cross-border payments for certain intangible services (e.g. advisory, legal, market research and advertising services), as well as fees for licenses, interest or dividends, where such payments exceed the threshold of PLN 2 million, are obliged to pay the withholding tax at the national rate first, and only then can they apply for a refund of any overpayment (under the "pay and refund" mechanism). In turn, the regulations obliging tax remitters to exercise due diligence when verifying the conditions of applying WHT exemption or preferential WHT rate, and to qualify the recipients as their beneficial owners in line with a new, broader, definition of the term (including the obligation to verify whether they conduct actual business activity), remain in force. Furthermore, the Ministry of Finance announced that amendments to PIT and CIT which would alleviate and simplify WHT collection rules would be passed in 2021.
The EU–UK Trade and Cooperation Agreement
On 24 December 2020, a trade and cooperation agreement (TCA) was agreed between the European Union (EU), the European Atomic Energy Community (Euratom) and the United Kingdom (UK) instituting new trade and cooperation framework as of 1 January 2021. On 30 December 2020, the TCA was passed by the UK parliament. The TCA provides for zero-tariff access for products traded between the UK and EU and a range of trade facilitation measures. However, in order to become eligible for zero-tariff access, it will be required to follow the amended EU-UK customs procedures for imports or exports, including new ”rules of origin” measures and VAT (and excise duty, where applicable) settling requirements.
A bill instituting e-Tax Office
The Ministry of Finance and the National Revenue Administration have prepared a bill on the automation of handling certain cases serviced by the National Revenue Administration. The key objective of the bill is to institute the 'e-Tax Office'. Electronic communication with the tax administration via the e-Tax Office, available through a portal or a mobile application, will be legally equivalent to the performance of activities in a traditional form. Additionally, the bill provides for automation of the certificate issuance process. E-Tax Office logged users will be able to use the service to authenticate documents and returns with an electronic seal, ensuring the integrity and authenticity of the data to which it pertains. The bill is to be approved by the Council of the Ministers in Q1 2021.