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:
On 03 December 2022, the decree on reduction of VAT rates in 2023 entered into force. Under the decree, from 1 January 2023 to 30 June 2023, VAT on basic food products listed in items 1-18 of Schedule 10 to the VAT Act will be cut to zero. Until 30 June 2023, 0% VAT rate will also continue to apply to free-of-charge deliveries of goods or provisions of services to: the Governmental Agency for Strategic Reserves, healthcare entities, and local government units, aimed at supporting victims of the armed conflict in Ukraine. At the same time, the decree provides for temporary (from 1 January 2023 to 31 December 2024) reduction to 8% of VAT rates on certain goods used for agricultural production.
On 1 December 2022, draft decrees of the Minister of Finance on the waiver of lump-sum corporate income tax and the waiver of lump-sum personal income tax were published on the Government Legislation Centre’s website. The decrees bring updates to the list of limitations and exemptions from applying the pay&refund mechanism provided for by existing decrees, as a result of amendments introduced by the Polish Deal program and extension of the temporary exemption granted to intermediary remitters defined by Article 26(2c) of the CIT Act. The new provisions are expected to enter into force on 01 January 2023.
On 01 December 2022, a bill amending the Value-Added Tax Act and certain other acts was published on the Government Legislation Centre’s website. Under the bill, e-invoicing is to become mandatory in Poland starting from 01 January 2024. It is to cover all the activities subject to domestic VAT, including domestic supplies of goods and provisions of services between companies (B2B), to public authorities (B2G), and to consumers (B2C). The obligation to issue e-invoices via National e-Invoicing System will be imposed on taxpayers performing activities subject to the invoicing obligation under Polish VAT regulations, having their seat in the territory of Poland. In principle, using NeIS will be optional for other taxpayers. Importantly, the new system can be also used to issue VAT RR invoices. The bill is expected to be passed by the Council of Ministers in Q1 2023.
On 30 November 2022, a clearance opinion dated 31 October 2022 (case file DKP1.8082.2.2022) on transforming a general partnership into a limited partnership was published. According to the Head of the National Revenue Administration, based on the described facts, the primary or one of the primary purposes behind performing the activity would be to achieve a tax benefit. At the same time, however, the authority noted that, in principle, transforming a company/partnership into another commercial company or partnership does not go against the intention of the legislator and the fact of using limitation or exemption from tax on a portion of the revenue obtained as part of the partnership's operations by partners of a limited partnership does not in any way go against the purpose of the act providing for taxation of limited partnerships. Moreover, considering the legislator’s intention behind introducing regulations on the solidarity levy and taxation of limited partnerships, despite the possibility of obtaining a tax benefit, the object or purpose of the tax act are not contradicted. Consequently, Article 119a(1) of the Tax Code finds no application.
On 23 November 2022, the European Parliament adopted a legislative resolution recognizing revenues generated through the carbon border adjustment mechanism (‘CBAM’) as an own resource of the EU. In practice, this means that CBAM revenue will enter into the EU budget. Adopting this legislative resolution is part of the implementation of the amendments to the law governing EU revenue, the so-called ‘own resources decision' (ORD). The amendments are to introduce three new sources of revenue of the EU budget, namely: allocation of EU ETS, carbon border adjustment mechanism (‘CBAM’), and a share in excess profits of MNEs (Pillar 1of the OECD/G20 Inclusive Framework). The CBAM should be introduced already on 01 January 2023.
On 28 November 2022, a governmental bill on special protection of certain consumers of gaseous fuels in 2023 was submitted before the Lower House of the Polish Parliament.
Solutions brought under the bill include, inter alia, setting a price-cap on gaseous fuels, maintaining fees for gaseous fuel distribution services at the level applicable in 2022, introducing a compensation scheme for energy-sector entities, VAT refund mechanism, and a wholesale market, as well as limiting the revenues of producers of gaseous fuels and trading companies. In principle, the new provisions are to bring a solution alternative to the windfall tax. This is because, pursuant to Article 23 of the bill, natural gas extraction companies shall transmit the gas write-off to the Price Difference Payment Fund, i.e. the amount of funds to be transferred by the natural gas extraction company to the account of the Price Difference Payment Fund referred to in Article 11(1) of the Act of 28 December 2018 amending the Excise Duty Act and certain other acts, calculated in relation to contracts for the sale of gaseous fuels, under which gaseous fuels were supplied in a given month.
On 24 November 2022, a draft decree of the Minister of Finance amending the decree on the waiver of tax on income (revenue) earned from the redeemed part of the subsidy granted by the National Development Fund under the Financial Shield schemes was published on the Government Legislation Centre’s website. The draft decree provides for prolonging the period of tax exemption for the existing beneficiaries of Financial Shields 1.0 and 2.0, for whom the value of redeemed debt constitutes income within the meaning of the provisions of the Income Tax Act. The waiver would cover income (revenue) earned by businesses under Financial Shields from 1 June 2021 until 31 December 2023 (redemption decision), meaning that the waiver period would be extended by another year.
On 28 November 2022, the Regional Administrative Court (RAC) in Gliwice, by way of decision bearing reference no. I SA/Gl 942/22, made a request for CJEU’s preliminary ruling. The RAC wants to know whether EU regulations preclude the establishment of formal requirements in national regulations for the use of CIT exemptions by collective investment institutions established in an EU Member State other than Poland or in another EEA country, in particular whether the regulations preclude the requirement to manage these institutions by external entities conducting their activities on the basis of a permission issued by the competent financial market supervision authorities in the state where their registered office is located.