Dear Readers,
At a regular meeting1 of the Project Office on the implementation of the new Tax Code, participants reviewed a package of amendments. The discussion covered the taxation of the financial sector, tax exemptions for nonresidents on stock exchange transactions, and the procedure for submitting information on certain types of utilities and transport services. Below is an overview of the proposed changes.
Financial sector
Tax Implications of the Transition to IFRS 17 for Insurance Companies
The proposal aims to mitigate the one-off tax effect for insurance companies arising from the transition to IFRS 17. In 2026, insurers must recognize in their income (or deductions) the difference resulting from the transition from IFRS 4 to IFRS 17. Adding this amount to the taxable income may significantly increase corporate income tax for 2026.
In this regard, the Project Office supported a proposal to allow payment of the income tax in equal installments over 2026–2028. This measure will smooth the tax burden. It will also exclude the impact of the one-off effect when calculating advance corporate income tax payments for subsequent periods.
VAT Exemption for Factoring Transactions
Under the previous version of the Tax Code, factoring transactions, along with forfaiting and bank guarantees, were exempt from VAT. Under the current rules, factoring is not classified as a loan, and therefore the VAT exemption does not apply. This increases the cost of financing for clients and reduces the attractiveness of the instrument. The Project Office therefore supported reinstating the VAT exemption for factoring transactions to stimulate the market.
Tax Exemption for Stock Exchange Transactions for Nonresidents
Currently, the exemption for capital gains from stock exchange transactions applies only to nonresident individuals. Previously, the same relief also applied to legal entities.
The proposal seeks to restore a uniform approach, which should help expand the investor base and increase market liquidity.
Submission of Information on Utilities and Transport Services
Under the current version of Article 56(6) of the Tax Code, organizations providing certain utilities and transport services are required to submit information on such services to the tax authorities on a quarterly basis. The requirement does not apply to individual entrepreneurs.
Following the discussion, the Project Office proposed to:
- extend the reporting obligation to all taxpayers, including individual entrepreneurs, to ensure equal coverage of business entities;
- exclude certain data from the reporting scope, as this information is already available in the tax authorities’ information systems;
- shift the reporting deadline from the 10th day to the last day of the month following the reporting quarter, enabling taxpayers to base the information on primary documents and improve the data accuracy.