Poland: Proposed legislative changes for corporate income tax, individual income tax

Innovation-targeted tax relief

Measures would amend the corporate income tax, individual income tax, and other tax laws.

Proposed tax legislation on 26 July 2021 was released for public consultation.

The measures in the draft legislation would amend the corporate income tax, individual (personal) income tax, and other tax laws.

Regarding corporate income tax, there are draft amendments to the provisions concerning the tax depreciation of property including measures to:

  • Extend the catalogue of assets used in a business activity and the sale of which, once they cease to be used in business activity, would be classified under income tax as revenue from business operations
  • Introduce changes to the method of depreciation of assets acquired before being used in a business activity
  • Exclude write-offs on residential buildings and premises from tax-deductible costs

There would also be certain innovation-targeted tax relief such as:

  • Relief for entities hiring innovative employees and for taxpayers that incur costs related to employing highly qualified employees involved with research and development (R&D)
  • Prototype relief covering test production of a new product or of marketing such a product
  • Pro-growth relief to increase revenues from product sales
  • IPO relief offered to companies making initial public offerings or investing in such companies
  • Robot-related relief, consisting of reducing the tax burden of the purchase of brand-new industrial robots as well as software and accessories needed to operate such robots

The draft bill would update the R&D provisions by allowing for joint use of the R&D relief and the intellectual property (IP) box regime. Moreover, taxpayers having the status of R&D centers may benefit from a deduction of eligible costs incurred in a given tax year in relation to R&D activities of 200% (including eligible costs of obtaining and maintaining a patent).

Other measures in the bill would:

  • Provide consolidation relief aimed at supporting corporate income taxpayers in increasing their visibility on foreign markets
  • Amend the withholding tax collection system to narrow the objective and subjective scope of the withholding tax refund procedure
  • Relax the conditions for establishing and operating tax capital groups, and introduce a new Polish holding company regime
  • Provide a number of simplifying and clarifying changes to the provisions on transfer pricing

Read a July 2021 report prepared by the KPMG member firm in Poland


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