KPMG Weekly Tax Review 9 MAY - 16 MAY 2022

It is 16 May 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

• Amendments to the Polish Deal passed by the Sejm
• Head of the Tax Office in Szczecin now responsible for accepting and handling financial statements
• Anti-Inflation Shield extended
• New return form template in tax on certain financial institutions
• Tax consequences of revoking the state of epidemic in Poland
• Change of jurisdiction of administrative courts in certain cases
• SAC: right of perpetual usufruct of land is a fixed asset in CIT

On 12 May 2022, the Lower House of the Polish Parliament passed the act amending the act on personal income tax and certain other acts, implementing PIT-related changes to the Polish Deal program. The Act provides for, inter alia, reducing the PIT rate for the first personal income tax bracket from 17 to 12 percent and eliminating the middle-class relief. Compared to the previous version, a raft of technical and editorial changes was introduced, as well as changes related to compensating for income losses for local governments and public benefit organizations. The act now moves to the Upper House of the Polish Parliament. The amendments are expected to enter into force on 1 July 2022. 

On 11 May 2022, the Decree of the Minister of Finance dated 9 May 2022 on designating a body of the National Revenue Administration for the purpose of preforming tasks of the Head of the National Revenue Administration in terms of accepting, handling, and making available financial statements due from corporate income tax payers was published in the Polish Journal of Laws. Pursuant to the Decree, taxpayers keeping books of account and required to make financial statements are now to pass such statements electronically to the Head of Zachodniopomorskie Tax Office in Szczecin. The decree will enter into force 14 days after its publication.

On 10 May 2022, while working on the Act amending the act on value-added tax, the Sejm’s Public Finance Committee introduced an amendment extending the force of anti-inflation measures, jointly referred to as the Anti-Inflation Shield, by two months, i.e., until the end of July 2022. The raft of anti-inflation measures includes, inter alia, exempting households from excise duty and a temporary exemption of fuel sales from retail sales tax. Moreover, the excise tax on light fuel oil will be reduced for two months. The bill has passed the third reading stage and is now to be assessed by the Senate. It is expected to enter into force on 1 July 2022. 

On 10 May 2022, a decree of the Minister of Finance on the new template of return form in tax on certain financial institutions was published on the Government Legislation Centre’s website. The decree provides details on the new template of return form in tax on certain financial institutions (FIN-1). The new template has been introduced to reflect changes brought by the Act of 9 March 2022 amending the act on covered bonds and mortgage banks, providing for the possibility of deducting the taxable base in tax on certain financial institutions by the value of assets in the form of bonds issued or loans granted by the Bank Guarantee Fund (BFG), available to some taxpayers. The decree is expected to enter into force on 1 June 2022 and apply to tax returns filed already for May 2022.

During a press conference held on 6 May 2022, the Minister of Health announced that on 16 May 2022 the state of epidemic would be revoked in Poland. At the same time, the state of epidemic is replaced with the state of epidemic threat. The recall of the state of epidemic will affect a number of tax preferences introduced due to the COVID-19 pandemic. In particular, due to the lift of the state of epidemic, the exemption from tax on revenue from buildings is to remain available only until the end of May 2022. On 1 June 2022, the obligation to settle the tax on revenue from buildings will be restored. Moreover, the one-off depreciation write-off on fixed assets used in manufacturing goods helping to counteract the COVID-19 epidemic and the deduction of donations intended for counteracting the effects of the COVID-19 pandemic will remain applicable only until the end of May. However, given that the state of epidemic threat continues to apply, special tax residency certificate provisions will remain in force. 

On 6 May 2022, the decree of the President of the Republic of Poland dated 20 April 2022 on granting the competence of examination of certain cases falling within the cognizance of the Director of the Regional Revenue Administration Office in Warsaw and the Head of the First Mazovian Tax Office in Warsaw to other provincial administrative courts, was published in the Polish Journal of Laws. Pursuant to the decree, responsibility for examination of certain cases falling within the cognizance of the Director of the Regional Revenue Administration Office in Warsaw, acting as an appeal body in respect of acts or activities of the Head of the First Mazovian Tax Office in Warsaw, or cases in this scope concerning inactivity and lengthy proceedings of the Director of the Regional Revenue Administration Office in Warsaw and the Head of the First Mazovian Tax Office in Warsaw is vested in provincial administrative courts, competent for the appellant's place of residence or seat. As per the applicable rules, the new regulations are to enter into force 14 days after their publication. 

In its ruling dated 10 May 2022 (case file II FSK 2229/19), the Supreme Administrative Court held that in situations where the tax act does not clearly define the right of perpetual usufruct as a fixed or intangible asset, it is justified, when relying on external systemic interpretation, to refer to the Accounting Act, according to which the right of perpetual usufruct of land should be classified as a fixed asset (Article 3 (1) (15)). The case at hand related to a company which had doubts as to whether, in situation of free disposal of a part of a mining plant, it was entitled to recognize the value of the perpetual usufruct right to land included in a part of the mining plant, established for tax purposes, in tax-deductible costs in CIT, according to Article 15(1) of the CIT Act in conjunction with Article 8b(2) of the Act on the functioning of the coal mining industry. The Director of the National Revenue Information Service stated that the company was not entitled to do so, yet both the RAC and the SAC challenged this decision.