Taxes – review of act to amend COVID-19 emergency legislation

 

PIT

  • One-off deduction of 2020 loss from 2019 (gross or net) income. Deduction is capped at PLN 5M and is done by adjusting the 2019 income tax return. Conditions:

1) loss in 2020 from non-agricultural business, and

2) total 2020 income from non-agricultural business is lower than 50% of the same income in 2019.

Any remaining loss can be carried forward under general law (Article 9(3) of the PIT Act).

  • Gifts donated to selected entities for combating COVID-19 are deductible from taxable base.
  • Income tax withheld in March or April 2020 can be paid by 1 June 2020 (applies to public service, employment, outwork, co-operative employment, and to social security cash benefits) if the taxpayers suffer adverse economic impact of COVID-19; the same applies to income tax on personal services (Article 13(8) PIT Act) or on copyright transfers (Article 18 PIT Act) with tax deductions applicable to creative content providers (Article 22(9)(3) PIT Act).
  • Payment of commercial property revenue tax for March to May 2020 is deferred until 20 July 2020, subject to statutory conditions, including adverse economic impact of COVID-19.
  • If the 2019 annual tax return is filed and the related income tax is paid after the statutory due date but until 31 May 2020, this will be treated automatically as if the filing was accompanied by a "self-report", which means that no criminal proceedings will be commnenced (Article 15zzj).
  • Waiver of requirement to increase income by the amount of liabilities remaining unpaid 90 days after due date (see Article 44(17)(2) and 44(23) PIT Act), subject to statutory conditions, including adverse economic impact of COVID-19.
  • Small taxpayers who have opted for simplified tax payment scheme in 2020 may opt out of the scheme during the tax year in relation to advance tax for March-December 2020, provided they suffer adverse economic impact of COVID-19. In such a case, they will pay the advance tax in accordance with Article 44(3) or 44(3f) PIT Act.
  • Idle time pay received under the emergency legislation is exempt from personal income tax.
  • Increased limits or caps:

– on assistance money from company or inter-company unions to their members: from PLN 1000 to PLN 3000 in 2020;

– on assistance money to individuals in case of fortuitous events, natural disasters, prolonged illness or death, paid from other sources: from PLN 6000 to 10,000 in 2020;

– on a benefit received from employer (but not funded via ZFŚS, or "GEBF") by an employee whose child is under individual day care or goes to a creche, kindergarten or children's club: from PLN 1000 monthly to PLN 2000 monthly in 2020 and 20201;

– on partial refunds from other sources for package vacation of children and youth up to the age of 18 organised by professional entities in the form of holidays, children's camps etc., whether or not combining leisure and teaching, or in the form of therapeutic holidays, spa therapy services, health and recreation resorts, etc.: from PLN 2000 to PLN 3000 in 2020 and 2021.

  • Fixed assets purchased to manufacture goods related to the fight against COVID-19 can be depreciated on a one-off basis.
  • Eligible expenses incurred in 2020 on R&D designed to develop products necessary for the fight against COVID-19 can be deducted from income used for calculation of advance tax.

 

CIT

  • With respect to a tax year which began before 1 January 2020 and will end after 31 December 2019 or which began or begins after 31 December 2019 but before 1 January 2021, if:

1) a taxpayer incurred a loss in that tax year, and

2) the taxpayer's income for that tax year is lower by 50% or more than his income in the tax year immediately preceding that tax year, then

the taxpayer is entitled to a single deduction of the amount of that loss from its income for the tax year immediately preceding that tax year, capped at PLN 5M.

Any loss remaining after the deduction can be carried forward under the general law (Article 7(5) CIT Act).

  • Gifts donated between 1 January 2020 and 30 September 2020 to selected entities for combating COVID-19 are deductible from taxable base.
  • Payment of commercial property revenue tax for March to May 2020 is deferred until 20 July 2020, subject to statutory conditions, including adverse economic impact of COVID-19.
  • Waiver of requirement to increase income by the amount of liabilities remaining unpaid 90 days after due date (see Article 26(19)(2) and 26(25) CIT Act), subject to statutory conditions, including adverse economic impact of COVID-19.
  • Small taxpayers who have opted for simplified tax payment scheme in 2020 may opt out of the scheme during the tax year, provided they suffer adverse economic impact of COVID-19. In such a case, the advance tax is to be paid in accordance with Article 25(1) CIT Act, starting with the month for which the taxpayer last used the simplified scheme.
  • Fixed assets purchased to manufacture goods related to the fight against COVID-19 can be depreciated on a one-off basis.
  • Eligible expenses incurred in 2020 on R&D designed to develop products necessary for the fight against COVID-19 can be deducted from income used for calculation of advance tax.
  • With respect to any tax year ending between 1 December 2019 and 31 January 2020, the deadline to file the annual tax return and pay the reported tax for that tax year is postponed:

1) until 31 July 2020, if:

all income of the taxpayer in that tax year was free from tax under Article 17(1) CIT Act; or

at least 80% of the taxpayer's total revenue in that tax year is revenue from public interest activities;

2) until 31 May 2020 in all other cases.

 

VAT

  • Effective date of JPK VDEK for large entities postponed to 1.07.2020,
  • Effective date of "VAT rates matrix" postponed to 1.07.2020.
  • Zero rate of VAT on gifts donated until 31 August 2020 to Materiel Reserves Agency or Central Sanitary and Epidemiological Reserves, provided the gifts involve medical devices, laboratory glass or equipment, medicinal products, biocidal products, or specilist tests.

 

Local taxes

  • Local council may enact exemption from real estate tax on business properties for part of 2020 for a group of undertakings whose liquidity has deteriorated due to adverse economic impact of COVID-19.
  • Local executive authority may by order extend deadlines to pay real estate tax otherwise payable in April, May or June 2020. The measure applies to groups of undertakings whose whose liquidity has deteriorated due to adverse economic impact of COVID-19. The maximum available extension is until 30 September 2020.

 

MDR

  • In the case of a reportable arrangement as defined in Article 86a(1)(10) of the Tax Code (tax scheme), any deadlines under Tax Code Part IIIA, Chapter 11a, will be suspended (if pending) or will not commence (if not yet pending) from 31 March until the earlier of (i) the date as of which the state of epidemic or of epidemic emergency is called off and (ii) 30 June 2020. But actions taken during that time will be valid.

 

TP

  • The time for the filing of a TP report under Article 23zf(1) PIT Act or Article 11t(1) CIT Act will be extended until 30 September 2020 for entities whose tax year began after 31 December 2018 and ended before 31 December 2019.

 

Tax Code

  • Extended time for invoice issuer to give notice to relevant tax office of the payment having been made to a non-white-listed account (see Article 96b(1) VAT Act); it is now 14 days from payment instruction date.
  • Deadline to prepare and file disclosures on contracts with non-residents for the purposes of foreign exchange regulations is extended until the fifth month following the reported tax year.
  • Deadline to report on payments and related withholdings of tax (WHT) is extended until the end of the fifth month of the year following the tax year in which the payments were made.
  • The three months' time for issuing a tax ruling is extended by another 3 months for applications pending as at the commencement date of the emergency legislation or filed later before the state of epidemic emergency (or the state of epidemic if one is declared) is called off. The minister competent for public finance may by regulation introduce further extensions but for no longer than 3 months.
  • With respect to taxes due to central government's budget, no deferral fee will be charged for a decision to defer the payment of such tax or to spread it over time, if the application for waiver of the fee is filed during the state of epidemic emergency (state of epidemic) or within 30 days after it is called off. The same applies to payment of ZUS contributions by reference to any period after 1 January 2020.
  • Upon application or of its own initiative, a tax authority may suspend a tax proceeding or an inspection under the Tax Code, or a customs and tax inspection. A suspension ruling will become effective when issued and must be delivered by the authority promptly, but in any case within such time as is appropriate for delivering a ruling to resume the suspended proceeding or inspection.
  • In addition, the minister competent for public finance may, by regulation, may suspend tax proceedings or inspections under the Tax Code, or customs and tax inspections, in which case he shall specify the applicable territory, the kinds of proceedings and inspections to be suspended and the duration of the suspension, considering the duration and effects of the state of epidemic emergency or state of epidemic.
  • The Council of Ministers may, by regulation, withhold administrative enforcement of monies due, in which case it shall specify the applicable territory, the classes of subjects to which the suspension applies and the duration of the suspension.
  • Where a customs and tax inspection is being held in an entity engaged in producing, moving or using excise goods, such as by way of manufacturing, processing, improving, denaturing, bottling, receiving, storing, issuing, transporting or destroying them, or in using such goods or attaching excise marks to them during the state of epidemic or of epidemic emergency, the relevant customs and tax office may, upon analysing the risk involved, refrain from:

1) requiring the presence of an inspector during any such activity that is being inspected;

2) any of the actions to be done by the inspector pursuant to Article 90 of the National Revenue Administration Act (in which case the inspector shall report to the authority on the course of the inspection).

 

Tax on certain financial institutions

  • Persons liable to tax under Article 4(1) to 4(4) of the Tax on Certain Financial Institutions Act of 15 January 2016 do not have to make sure that the basis of charge to that tax includes loan assets representing loans under Article 69 of the Banking Law Act of 29 August 1997 which have been extended to businesses affected by COVID-19 if the loan contract is made between commencement of the emergency legislation and 31 August 2020.

 

Accounting

  • Time for PIT taxpayers to file financial statements is now extended until 31 July 2020
  • Extensions of deadlines under Accounting Act:

90 more days to prepare G/L trial balance (60 days if organisation is regulated by KNF, i.e. the Polish financial services regulator);

90 more days to take physical inventory (60 days if organisation is regulated by KNF);

3 more months to prepare financial statements (2 months if organisation is regulated by KNF).

 

Biofuels

  • The deadlines for any statements, declarations or reports under Articles 30(1), 30(1b), 30(2b), 30(2e), 30(3), 30(4a), 30b(1), 30b(3), 30b(7), 31(1), 31a or 31b of the Biocomponents and Liquid Biofuels Act with respect to 2020 are extended by 30 calendar days over their original durations.

 

Other

  • The annual perpetual usufruct fee for 2020 and usufruct conversion fee are deferred until 30 June 2020.
  • The collection of audiovisual fees and radio & TV tax is withheld (see the relevant legislation).
  • It is possible to obtain an "interim trusted profile" (see the legislation governing the digitization of public services).
  • The introduction of retail sales tax is deferred until 1 January 2021.

 

CRBR

  • The deadline to report beneficial owners has been postponed by 3 months to 13.07.2020.

 

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