The regulation of the Minister for Finance, Funds and Regional Policy on the non-collection of income tax relating to forgiven debt represented by financial subsidies granted under the Financial Shields of the Polish Development Fund PFR and made non-refundable (“Regulation”) was published in the Journal of Laws on 19 July 2021. In accordance with the Regulation, there will be no collection of income tax (whether PIT or CIT) in respect of income arising due to forgiven debt represented by PFR-granted subsidies that have been made non-refundable.
This measure is intended for businesses which received PFR support as part of PRF Shield 1.0 and 2.0 since they would be generally deemed to earn taxable income represented by subsidy liabilities made non-refundable.
Under the Regulation, the non-collection measure will apply to income derived from 1 June 2021 to 31 December 2022.
The Finance Ministry published guidance on its website suggesting that the non-collection will not change the tax treatment of any costs funded through the subsidies – these costs continue to be treated as tax-deductible under the general rules. Accordingly, the expenses funded through the subsidies are deductible for tax purposes if they meet the requirements laid down in relevant tax legislation.
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