It is 25 July 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
In today's episode:
- Draft cabinet decree on state aid granted to selected businesses for new project implementation
- Further amendments to the National Court Register announced
- Another resolution of the Anti-Tax Avoidance Council
- Actual VAT refund deadlines shorter than the statutory ones
- Data of the Ministry of Finance on financial inspections and current budgetary revenues
- Succession of flat taxation
- Depleted mineral deposits subject to reclamation in the context of real estate tax
- New draft bill implementing the Single-Use Plastics Directive
Draft cabinet decree on state aid granted to selected businesses for new project implementation
On 26 July 2022, a draft cabinet decree on state aid granted to selected businesses for new project implementation was added to the list of legislative work and policies of the Council of Ministers. It is to replace the decree of 2018 which is to expire on 1 January 2023. The main goal thereof is to provide better access to state aid for reinvestments, i.e., investments in tangible fixed assets or intangible assets related to the increase in the production capacity of an existing enterprise, diversification of the enterprise production through introduction of products not previously manufactured or a fundamental change in the production process of the existing enterprise, including a raft of clarifying amendments. The draft decree is to be passed by the Council of Ministers in Q4 2022.
Further amendments to the National Court Register announced
On 26 July 2022, the Council of the Ministers adopted a draft bill amending the Act on the National Court Register and certain other acts. The bill is to align Polish regulations with the provisions of the Directive (EU) of the European Parliament and of the Council as regards the use of digital tools and processes in company law. The key amendments include simplifying the process of registration/submission of documents to the National Court Register, facilitating online registration of limited liability companies, increasing the availability of data contained in the National Court Register for foreign-language users or extending the scope of exchange of information between registers via system of interconnection of registers. The new provisions are expected to enter into force on 1 December 2022.
Another resolution of the Anti-Tax Avoidance Council
On 7 July 2022, the Anti-Tax Avoidance Council adopted a resolution (6/2022) on a taxpayer who in 2014-2015 engaged in a series of activities, as a result of which in 2017 they charged license fees for the use of trademark previously owned by that taxpayer into tax-deductible costs. According to the taxpayer, the goal of the activities performed was to secure the trademarks against being absorbed by entities formed as a result of the ongoing concentration of groups of companies and to increase efficiency by separating an organized part of the enterprise covering trademarks. In turn, in the opinion of the Head of the National Revenue Administration, the activities were performed in an artificial manner, with the main goal to obtain a tax benefit against the object and purpose of the tax act provisions. The taxpayer disagreed and lodged an appeal, in which they requested the Head of NRA to seek the opinion of the Anti-Tax Avoidance Council.
On 7 July 2002, the Council sided with the Head of NRA. According to the Council, this position is supported by, inter alia, the presence of elements aimed at reaching a state identical to or resembling the state from before performing the action, or self-cancelling or self-compensating elements.
Actual VAT refund deadlines shorter than the statutory ones
In response to a parliamentary inquiry no. 34276, the Deputy Minister of Finance gave figures showing that in May 2022 VAT refunds for which the maximum statutory deadline is set at 60 days were usually made within 35 days, while the taxpayers using the automatic refund mechanism received the amounts due in 11 days on average, counting from the date the VAT return was approved. Introduced this year, the automatic refund mechanism allows for automatic examination of the validity of refunds and automatic transfer to bank accounts. It applies to VAT (and PIT) refunds up to the amount of PLN 5,000.
Data of the Ministry of Finance on financial inspections and current budgetary revenues
According to the Ministry of Finance, in 2021, PIT revenues amounted to PLN 136 billion, while VAT revenues were almost PLN 216 billion. In turn, the revenues in the first half of the current financial year 2022 make up for 48% (PLN 65 billion) in the case of PIT, and in the case of VAT, 51% (PLN 110 billion) of the total last year's revenues. Moreover, in 2021, tax offices performed 15,781 tax inspections, out of which 4,956 (31%) culminated in a voluntary tax return adjustment by the taxpayer. The total value of inflows resulting from tax inspections carried out in 2021 was over PLN 3 billion. In turn, in 2021, receivables remaining to be paid by taxpayers due to tax decisions made by tax authorities totalled over PLN 4.2 billion, while in the first 5 months of 2022, the total value of receivables due under such decisions amounted to almost PLN 1.7 billion.
Succession of flat taxation
By way of its ruling dated 21 July 2022 (case file II FSK 1326/21), the Supreme Administrative Court pronounced itself in the case of a taxpayer who inherited from her husband a limited partner’s interest in a limited partnership. The income of the taxpayer’s late husband on this account was subject to 19% flat tax. The taxpayer had doubts as to whether she was entitled to tax the income obtained in connection with participation in a limited partnership at a flat rate. In the Court’s opinion, the right of the taxpayer’s heirs to take over the right to apply the flat rate in personal income tax constitutes a property right as referred to in Article 97(1) of the Tax Code. The material provisions do not require the heir of the taxable person to submit any declaration on the acquisition of this property right or on the transfer of this right to the heirs. This means that the right to apply flat taxation is taken over by the heirs when the estate is opened by operation of law.
Depleted mineral deposits subject to reclamation in the context of real estate tax
In its ruling dated 20 July 2022 (case file III FSK 708/21), the Supreme Administrative Court held that since the activities related to reclamation and development of depleted lands constitute an element of extraction activity, it cannot be assumed that lands that are about to become subject of reclamation activities are outside the scope of an entrepreneur’s business operations, regardless of whether the deposits are depleted, or a concession is expired. Consequently, the land owned by the taxpayer and used as a gravel, sand, clay, and kaolinite extraction site shall be treated as applied in their business activity and, consequently, subject to real estate tax.
New draft bill implementing the Single-Use Plastics Directive
On 26 July 2022, a new draft bill amending the Act on the Entrepreneur Duties to Manage Certain Waste and Product Fee and some other acts, implementing the Directive (EU) 2019/904 of The European Parliament And 0f The Council of 5 June 2019 on the reduction of the impact of certain plastic products on the environment (commonly referred to as the “Single-Use Plastics Directive), with the transposition deadline that expired on 3 July 2021, was published on the Government Legislation Centre’s website. The most important changes compared to the previous version include introduction of a definition of a meal and drink and setting of additional rates for various charges. As per the applicable rules, the act is to enter into force 14 days after its promulgation.