This is to let you know that work is currently underway to amend the Finance Minister regulation excluding or restricting the application of Article 26(2e) of the Corporate Income Tax Act in order to again defer the effective date of the new withholding tax mechanism. The draft amending regulation is dated 22 April 2020.
The proposed postponement is related to the COVID-19 epidemic and, as stated by the Finance Ministry, is justified by “the need to limit compliance duties on businesses in connection with tax withholding as well as the need to ensure appropriate processing capacity on the part of revenue administration”.
In the new withholding tax mechanism, if payments subject to withholding tax made by a withholding agent to a taxpayer exceeded PLN 2M during a tax year, the tax on any further such payment made to the taxpayer in excess of the threshold would generally have to be withheld using the standard statutory rate (20% for interest, royalties, intangible services, and 19% for dividends).
The proposed amendment is that this new mechanism for payments above PLN 2M would be deferred until 31 December 2020.
The authorities also propose to amend the Finance Minister regulation excluding or restricting the application of Article 41(12) of the Personal Income Tax Act. According to this proposal, the new withholding rules applicable to personal income tax would be disapplied until 31 December 2020 as well.
Both pieces of proposed amending legislation have been published on the website of the Government Legislation Centre and are currently undergoing public consultations. We will keep you up-to-date on further changes to withholding tax that may be planned.
If this issue pertains to your business and you are interested in our assistance, please contact us.
This blog post is provided for general information purposes to keep you up-to-date with changes in tax law, tax rulings by authorities, case law of courts and interesting commentaries. Doradztwo Podatkowe WTS&SAJA shall not be held legally liable for any acts or omissions resulting from reliance on such information.