It is 20 September 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:
- Minimum income tax included in the latest draft bill under the Polish Deal
- Fuel package non-compatible with EU law
- Re-launch of Financial Shield for large companies
- Amendments to TP-R decrees
- General rulings of the Ministry of Finance of 2 September 2021
- Clearance opinion on establishing a R&D centre in a general partnership
- Clearance opinion on decreasing depreciation rates in the Special Economic Zone
Minimum income tax included in the latest draft bill under the Polish Deal
The latest draft bill submitted to the Lower House of the Polish Parliament as part of the government’s Polish Deal program is to introduce provisions on a new levy placed on companies and Polish establishments owned by foreign entities, designed as a minimum tax payable by corporates that do not declare a sufficient taxable income in Poland. In principle, the new tax is to cover entities with the share of income in revenue other than capital gains amounting to 1% or less or reporting losses in a given tax year. Importantly, the government submitted to the Sejm a self-amendment to the proposed provisions, to exclude from the scope of the new tax entities operating in certain industries (e.g. mining, energy or air transport) with a specific business profile, for which low profitability is not due to tax evasion but results from specific business circumstances, e.g. administered prices in the power sector.
Fuel package non-compatible with EU law
On 9 September 2021, CJEU issued a judgment for case no. C-855/19, in which it held that Article 103(5a) of the Polish VAT Act stipulating that, in the case of an intra-Community acquisition of motor fuels, the taxable person must calculate and pay the amounts of tax within five days from the introduction of the fuels into national territory, goes against the EU VAT Directive. Pursuant to Article 69 and Article 222 of the EU VAT Directive, for intra-Community acquisition of goods, VAT becomes chargeable when the invoice is issued or, at the latest, on the fifteenth day of the month following that in which the chargeable event occurs. The EU VAT Directive provides for no derogation from this general principle; therefore provisions of national law should not impose an obligation to make early payment or advance payment of VAT before it becomes chargeable. The judgment may constitute the basis for resumption of proceedings in cases in which a final decision or a final judgment of an administrative court have already been delivered.
Re-launch of Financial Shield for large companies
The Polish Development Fund announced that starting from 30 September 2021 it will be possible to apply for preferential financing under the Financial Shield for Large Companies scheme. The financing will take form of a redeemable, interest-bearing preferential loan granted for up to six years. The amount of the loan will depend on the estimated damage suffered by the enterprise as a result of the COVID-19 pandemic during the period of restrictions in force from 1 November 2020 to April 2021, yet it cannot exceed the amount of PLN 750 million, twice the company's wage expense (including the costs of employee benefits) for 2019 and 25 percent of the company’s total turnover in 2019. Loans will be available until 31 December 2021 (and, in some particular cases, until 31 March 2022), as a one-off payment or in instalments.
Amendments to TP-R decrees
On 14 September 2021, draft decrees of the Minister of Finance, amending the decree on transfer pricing documentation in the scope of corporate income tax and the decree on transfer pricing documentation in the scope of personal income tax, were published on the Government Legislation Centre’s website. The amendments consist, inter alia, in, adding information on the value of the reported transactions per country of the counterparty’s seat or place of management, providing details on the type of the reported transaction and on the beneficial owner’s country, for transactions referred to in Article 11o(1a) of the CIT Act and Article 23za(1a) of the PIT Act, along with clarifying how the transfer pricing reports should be completed. The draft decrees, however, contain no information on their possible entry into force.
General rulings of the Ministry of Finance of 2 September 2021
On 7 September 2021, the Ministry of Finance published general rulings on the application of exemption under Article 21(1)(131) of the PIT Act in cases of spending revenue from the sale of real estate or property rights on payments made under a developer contract (case file DD2.8202.1.2021) and on the application of VAT exemption on services consisting in managing foreign investment funds (case file PT6.8101.2.2021). In the first ruling, the Minister of Finance pointed to the fact that under the provisions in force until the end of 2018, to apply the tax relief, it was enough to sign a developer contract and spend money for housing purposes within two years. Consequently, the final transfer of ownership did not have to take place. In the latter, the Minister indicated that the exemption can be applied solely to services consisting in managing investment funds registered in Poland, meaning that it cannot be applied to foreign investment funds.
Clearance opinion on establishing a R&D centre in a general partnership
On 2 September 2021, the clearance opinion issued by the Head of the National Revenue Administration on 26 July 2021 was published. The opinion provided an analysis of whether establishment of a research and development centre in a general partnership not having the status of a CIT taxable person constitutes a form of tax evasion. According to the Head of the National Revenue Administration, given the state of facts presented by the Applicants, despite the possibility of obtaining a tax benefit, it can be concluded that the object or purpose of the tax act are not contradicted and the manner of performing the activity is not artificial. As a result, the GAAR provisions find no application to the tax benefit obtained by the Applicants as a result of the action performed.
Clearance opinion on decreasing depreciation rates in the Special Economic Zone
On 2 September 2021, the clearance opinion issued by the Head of the National Revenue Administration on 3 August 2021 was published. The opinion related to the possibility of decreasing depreciation rates on particular fixed assets throughout the period of using State aid by the company. According to the Head of the National Revenue Administration, the purpose of decreasing depreciation rates in a special economic zone is to obtain a tax benefit. Nevertheless, it cannot be concluded that an entity acting reasonably and pursuing a lawful purpose would not embark on such a course of action. As a result, the GAAR provisions find no application to the tax benefit obtained by the Applicants as a result of the action performed.