Unlike previous years’ practice, new rules regarding next year’s tax changes were made surprisingly early in 2015. Law changes this year will not be that dominant although it is important to pay attention to possible law amendments that will be announced until the end of the year, as further clarifications are always to be expected. We will summarize the most relevant changes that could affect our partners’ economical activities. Further tax amendments will be published in our upcoming newsletters – the current newsletter will deal with the corporate tax change only.
Tax credit for growth
Legislators have implemented tax credit for growth allowance in accordance with the Corporate Tax Act. The new provision’s structure requires that tax/tax advance payable should be paid within the next two tax years by the amount of the pre-tax profit in the current tax year that exceeds the pre-tax profit in the previous tax year.
This will not provide tax advantage for the companies included in this scheme, however it will improve the liquidity of businesses as it forces the tax liability to be paid later. Tax credit for growth comes with certain conditions to be met, which are as follows:
Company has taxable status since 3 tax years
Company has not been transformed in the last 3 tax years
The pre-tax profit’s yield is equal or greater than five times the previous year’s pre-tax profit
Benefits of the rule
Dynamically improving businesses that gain profit fast, will benefit the most from tax credit for growth. Please note, that tax credit for growth can be used already after the current tax year’s profit even though it is only in next year’s proposed amendments. Tax liability to be paid can be delayed not only when the tax payment itself is due, but when advance tax payments are due as well.
Businesses utilizing tax credit for growth also enjoy further allowance – they do not have to deal with tax credit for growth’s not yet due amount of tax payable if they realize tangible asset investment and increase the headcount in their own business within 2 tax years of utilizing the benefits of tax credit growth.
Should you have any questions regarding the new amendment for tax credit for growth, please do not hesitate to contact us – our team of experts is always at your service.
Download our 2017 Guidelines for details about the statutory framework and local entrepreneurial environment in the Czech Republic, Hungary, Poland, Romania, Slovakia and Ukraine! We have prepared for each country: