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It is 7 June 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:

  • New development reliefs to be introduced under the Polish Deal
  • VAT Groups put out to pre-consultation
  • Expenses incurred to keep a business operating during the pandemic can be deducted
  • VAT registers now without the MPP symbol
  • First tax strategy report to be submitted in 2022
  • G-7 nations reach deal on global tax reform

New development reliefs to be introduced under the Polish Deal

During a press conference held on 2 June 2021, the Polish Minister of Finance presented new development reliefs to become available under the Polish Deal program. The raft of the new reliefs include the IPO relief, individual investor relief, venture capital relief and consolidation relief. Furthermore, the Ministry announced some amendments to the Estonian CIT scheme: starting from 2022, the scheme will become available to cooperative societies, limited partnerships, and limited joint-stock partnerships, while the annual revenue threshold and the condition of making capital expenditure in a specified amount are to be abolished.

VAT Groups put out to pre-consultation

On 31 May 2021, the Ministry of Finance announced that the issue of introducing VAT grouping into the Polish VAT framework has been put out to pre-consultation. According to the Ministry, a “VAT Group” assumes submitting a single SAF_VAT file instead of separate SAF_VAT files provided by each company, no intra-group invoicing and economic neutrality of turnover. During the pilot phase, VAT Groups are to be treated on similar terms to Tax Capital Groups in CIT.

Expenses incurred to keep a business operating during the pandemic can be deducted

The National Revenue Information Service (NRIS) confirmed that the expenses incurred to keep a business operating during the pandemic have for the purpose securing or preserving a source of revenue and as such can be treated as tax-deductible costs. According to NRIS, to classify the expenses in question as tax-deductible costs, it does not matter whether the entrepreneur has officially suspended their business activity (pursuant to the Economic Freedom Act) or simply temporarily ceased their business. In both cases, expenses incurred to keep a business operating shall be treated as tax-deductible costs.

VAT registers now without the MPP symbol

The Ministry of Finance published the latest revision of the proposed amendments to the decree on the Standard Audit File. Following public consultation, the transactions in which the purchaser has voluntarily applied the split payments mechanism will not have to be marked with the “MPP” symbol. Importantly, the requirement to use the “MPP” symbol in SAF-T has been completely waived. The new draft brings some amendments to the scope of application of the “TP” symbol to transactions with related entities. Now, the “TP” symbol is to be used only in dealings with the State Treasury or local government units. The definition of accounting and training services marked with the code GTU_12 will also change. Furthermore, the obligation to indicate the payment date or the date of receipt of payment will also be introduced for VAT adjustments made by companies using bad debt relief. The draft is currently assessed, with the majority of amendments to become effective on 1 July 2021.

First tax strategy report to be submitted in 2022

According to the information made available in relation to the Legal Shield mechanism, currently elaborated by the Ministry of Economic Development, Labour and Technology, the first report on the executed tax strategy will have to be submitted no earlier than in 2022. The obligation to publish information on the implemented tax strategy was originally brought by the amendment to the income tax acts of 28 November 2020. It was imposed on companies exceeding the annual revenue threshold of EUR 50 million along with tax capital groups. Pursuant to the Act, the report should be published on the taxpayer's website by the end of the twelfth month following the end of the tax year, yet, until now, no information on when the first report should be published has been provided. The Ministry of Finance initially announced that the first report should be made available as early as in 2021. Yet, following the latest amendments, a new provision is to be added to the Act, according to which the first report on the implemented tax strategy shall be established for the tax year starting after 31 December 2020. This means that the first report, covering the current tax year, must be published by the qualified company no earlier than in 2022.

G-7 nations reach deal on global tax reform

Finance Ministers from G7 reached a deal on a global tax framework reform. The reform package, the works on which were initiated already in 2019, is to be based on two pillars. The first one is to ensure that digital multinationals will pay the CIT due where they actually do business. This solution would apply to global companies with at least a 10% profit margin. 20% of any profit above that would be reallocated and taxed in the countries where they operate. The second pillar of the agreement commits states to a global minimum corporate tax rate. Such a solution would be aimed at curtailing the widespread use of tax havens. The minimum CIT rate would amount to 15%. The details of the agreement will be discussed at a meeting of G20 finance ministers and central bank governors.