Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
On 21 June 2023, a clearance opinion issued by the Head of the National Revenue Administration dated 08 May 2023 was published. The opinion relates to the possibility of reducing depreciation rates on selected fixed assets throughout the period of using State aid by a company (case file DKP3.8082.1.2023). The goal of the analysis was to verify whether making downward adjustment to depreciation rates on selected fixed assets (shown in the accounting records not later than on 31 December 2020) in the circumstances described by the Applicant meets the statutory criteria of tax evasion as provided for, inter alia, by Article 119a(1) of the Polish Tax Code. The fixed assets in question would be treated as depreciable assets, used, inter alia, in business activities conducted in a Special Economic Zone, and subject to straight-line depreciation method. The Applicant plans to reduce the rates by ¾ of the nominal values presented in the List of Annual Depreciation Rates, but not less than to 1%. The Head of the National Revenue Administration stated that the above-described activities do not meet the statutory criteria of tax avoidance.
On 20 June 2023, The Ministry of Finance launched tax consultations on draft tax clarifications regarding tax on shifted profits. Apart from providing general information on how the tax on shifted profits would work, the Clarifications are to explain how
- the material provisions should be interpreted and applied, especially in
- in terms of:
- taxable base and method of showing particular tax-deductible costs, such as depreciation write-downs and debt financing costs
- conditions for applying the shifted profit tax to foreign entities, including the prerequisites for applying a reduced rate (the method of calculating the income tax rate lower than 14.25%), as well as examining the conditions for the transfer of 10% of the revenue received from the taxpayer by the intermediary, as well as
- methods of how failure to meet particular conditions to be covered by the shifted profit tax by foreign related entities should be documented by taxable persons.
Moreover, the draft provides valuable guidelines on how to understand "achieving the majority of revenue (at least 50%) from passive payments from Polish companies".
The consultation process is open to all interested entities. Opinions - in the form of editable documents - should be sent by email to: email@example.com by 10 July 2023. Non-editable documents (e.g., in the .pdf format) should be accompanied by their editable versions.
On 20 June 2023, the Ministry of Finance announced the launch of tax consultations regarding amendments to the Polish Tax Code. The goal thereof is to simplify tax procedures, boost effectiveness of tax authorities, improve relations between taxpayers and tax authorities, and clarify provisions that raise taxpayers’ doubts. The bill provides, inter alia, for:
- differentiating fees for issuing tax rulings and adjusting them to the type and size of the Applicant, as well as introducing validity period for tax rulings,
- the possibility of applying simplified proceedings, in specified cases and at the taxable person’s request,
- the possibility of paying a taxable person’s tax by individuals from outside their immediate family, up to the amount of PLN 5,000 (currently: PLN 1,000), and, finally,
- introducing binding tax information.
The consultation process is open to all interested entities. Opinions - in the form of editable documents - should be sent by email to: firstname.lastname@example.org. Non-editable documents (e.g., in the .jpg format) should be accompanied by their editable versions. The consultation process ends on 31 August 2023.
On 16 June 2023, a bill on deposit-refund system was submitted before the Lower House of the Polish Parliament. The bill is to introduce, from 01 January 2025, a deposit-refund system covering single-use plastic bottles up to 3 litres, reusable glass bottles up to 1.5 litre and metal cans up to 1 litre. Retailers with over 200m2 floor area will be required to collect empty packaging and packaging waste subject to the deposit-refund system and to return the deposit. Smaller retailers can participate in the program on a voluntary basis. The bill will be examined by the Sejm during a sitting held on 06-07 July 2023 and submitted before the Senate at the end of the holiday season. Under the notification procedure, the European Commission will have time to submit comments to the bill until 11 September 2023, and Poland is obliged to take these comments into account.
Pursuant to regulation of the Minister of Health dated 14 June 2023 on revoking the state of epidemic threat in the territory of the Republic of Poland, the epidemic emergency status in Poland is to be revoked on 01 July 2023. Pursuant to Article 31y(1) of the COVID-19 Act, for domestic arrangements, the MDR deadlines shall be suspended until the 30th day following the lift of the state of epidemic, or the state of epidemic threat introduced in connection with the COVID-19 pandemic. This means that at the beginning of August the suspension of deadlines for reporting tax schemes meeting the requirements resulting from Polish tax regulations (so-called national tax arrangements) will be lifted. This does not apply, however, to tax schemes under the DAC-6 directive. In turn, pursuant to Article 15zzr1 of the COVID-19 Act, six months from 1 July 2023, the statute of limitations to prosecute the case or to execute the penalty in criminal and criminal fiscal proceedings will start to run anew.
A draft resolution of the Council of Ministers on a new compensation program for energy-intensive industry to address the level of prices of natural gas and electricity in 2023 was added to the list of legislative work and policies available on the Government Legislation Centre’s website. The goal of the program is to mitigate the negative effects of the increase in electricity and natural gas prices. The aid can be applied for by companies meeting the energy-intensity condition (for which the costs of electricity and natural gas made up at least 3% of total production volume in 2021) and obtaining most of their income or production value from activities in one or more subclasses of the PKD [Polish Classification of Activities] listed in sections B and C. It is also allowed to apply for aid when demonstrating costs incurred by an organized part of an enterprise. In such a case, the aid value will be calculated only based on costs of natural gas and electricity incurred by that organized part of the enterprise. The applications can be submitted for three separate periods, i.e., H1, Q3, and Q4 2023. The deadline for submitting applications for the first period elapses on 14 August 2023.
On 21 June 2023, the Supreme Administrative Court issued a judgment in the case I FSK 686/10. The case related to a company which wanted to know whether, in a situation where a customer makes a late advance payment, i.e., after the 30th day from the date of issuing the VAT invoice, the invoice should be treated "empty” (fictitious) and as such subject to Article 108(1) of the VAT Act. According to the Court, Article 108(1) of the VAT Act does not relate to invoices documenting actual transactions yet issued prematurely. In fact, sections 1-2 thereof relate only to “empty” invoices, i.e., invoices that do not document actual economic events. Consequently, the requirement to pay tax under Article 108 of the VAT Act relates only to empty invoices and should be treated as a preventive measures discouraging from introducing fictitious invoices into trading and taking advantage from the possibility of deducting input tax on such account. Instead, where an invoice reflects an actual, taxable economic event, the mere fact of issuing an invoice prematurely does not give rise to the obligation to pay the tax under Article 108 of the VAT Act for the company.
The European Commission is now working on an initiative to amend the withholding tax regime. The goal thereof is to improve effectiveness and protection of EU procedures which would benefit investors, financial intermediaries and tax administrations. It should come into effect in 2027. Additionally, the amendments aim at implementing a common digital tax residence certificate (eTRC), to make WHT procedures faster and more effective. Investors with diversified EU investment portfolios will only need a single digital certificate to receive a number of refunds throughout a single year. In principle, the eTRC will be issued within one working day from submission of a request. In addition, the changes will include two accelerated procedures supplementing the current standard tax refund procedure (relief at source system and quick refund system), as well as standardization of reporting obligations.