It is 1 February 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:
- OECD's guidance on tax treaties and the effect of the coronavirus
- Clearance opinion on the possibility of depreciation rate adjustment in CIT
- The Act introducing a fee on offshore wind farms signed by the President
- How to deal with limited partnerships' books in the context of changes in CIT, as explained by the Ministry of Finance
- Extended support under Shield 6.0 starting from 1 February
- Launching of the Central Register of Excise Entities
OECD's guidance on tax treaties and the effect of the coronavirus
The Organisation for Economic Co-operation and Development issued updated guidance on the impact of the COVID-19 crisis on tax treaties, pursuant to which, compulsory work abroad due to the pandemic should not affect the existing tax obligations, and the stay abroad caused by the introduced restrictions should not be included in the limit of 183 days set by national regulations. Importantly, salary subsidization, downtime benefits and other possible stimulus packages adopted or proposed by governments should be attributable to the place where the employee would otherwise have worked if the pandemic had not taken place. Furthermore, according to the Organisation, the exceptional and temporary change of the location where employees exercise their employment should not create new PEs (permanent establishments) for the employer. The situation would be different if, after the restrictions were lifted, the employee continued to work remotely abroad. Importantly, a PE will also not be given rise to, if the employee habitually concludes contracts on behalf of the enterprise, since in such a situation they cannot be considered a dependent agent, except for the situations where the employee acted as a dependent agent before the pandemic, or will enter into commercial contracts for the benefit of the employer after the pandemic ends.
Clearance opinion on the possibility of depreciation rate adjustment in CIT
The Head of the National Revenue Administration (NRA) published a clearance opinion on the possibility of making upward and downward adjustments of depreciation rates, pursuant to Article 16i(4-5) of the CIT Act, issued on 7 October 2020. In the opinion it was indicated, inter alia, that managing tax costs through write-offs, as a result of shaping the level of taxable income, may give rise to tax benefits. Nevertheless, the Head of NRA admitted that making depreciation rate adjustments does not go against the object or purpose of the Act and, considering that the actions taken by the taxpayer in the circumstances indicated in the application cannot be deemed artificial in nature, there are no prerequisites for applying Article 119a of the Polish Tax Code (the Tax Avoidance Clause).
The Act introducing a fee on offshore wind farms signed by the President
On 21 January 2021, the Polish President signed the Act on promoting electricity generation by offshore wind farms. The Act provides for support instruments for offshore wind farms electricity generators, who will be granted the right to cover the so-called negative balance – which practically means covering the difference between the market energy price and the price enabling generators to cover the offshore electricity generation costs. Furthermore, the Act brings a new fee on offshore wind farms. The basis for calculating the fee will be the installed capacity of a given offshore wind farm, 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. The cap set on the ratio by the Act is PLN 23k/MW.
How to deal with limited partnerships' books in the context of changes in CIT, as explained by the Ministry of Finance
The possibility of deferring the taxation of limited partnerships with CIT until 1 May 2021 gave rise to a plethora of doubts as to the closing of the books and the preparation of financial statements by such entities. According to the Ministry of Finance's statement published on podatki.gov.pl, in such a situation a limited partnership will not be obliged to prepare and submit a financial statement on 30 April 2021. Thus, closing the books on 30 April 2021 and their subsequent opening on 1 May 2021 will take place only for tax-related purposes. Consequently, if the financial year of the limited partnership coincides with the calendar year, it will run from 1 January 2020 to 30 April 2021 and the financial statement due will cover only this period. In turn, the subsequent financial year will run from 1 May to 31 December 2021, i.e. only for eight months.
Extended support under Shield 6.0 starting from 1 February
On 19 January 2021, the Council of Ministers issued a decree on providing support to businesses affected by the COVID-19 pandemic, which came into force on 1 February. The decree extended the group of entities eligible for a workplace protection subsidy in the amount of PLN 2k per employee monthly. Additionally, the support is now to cover additional business activities, not included in the previous regulations (namely, the following PKD codes: 55.10.Z, 55.20.Z, 55.20.Z, 79.11A and 79.12.Z), such as hospitality and tourist industry. Moreover, the deadline for applying for a subsidy was extended to 31 March 2021. This means that the aid may be granted also to entities which expect a 40% drop in revenues in February 2021. The decree also extended the group of entities entitled to receive a PLN 5k subsidy from the District Governor [starosta] to cover the running costs of operations. The subsidy can be awarded to companies that have already received it and those that were not entitled to it before.
Launching of the Central Register of Excise Entities
On 1 February 2021, the Central Register of Excise Entities was launched. The goal of the Register is to collect information on how excise goods are used. The registration obligation has been imposed on excise duty payers, coal sale intermediaries and gas sale intermediaries, as well as other entities not conducting business activity, but using excise goods exempted from excise duty due to their intended use (e.g. aviation and marine fuel). The Register is kept by the Head of the Regional revenue administration office in Poznań and has replaced 44 individual registers kept by the heads of tax offices. The registration applications must be submitted by qualified entities electronically, via Electronic Services Portal of the Customs Service, by 30 June 2021 at the latest, using a new form.