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Polish fiscal roller coaster | News Flash

March 9, 2021

After a year with COVID Polish economy seems to be extremely immune to the economic crisis. Poland has experienced a recession for the first time in 30 years. According to the Central Statistical Office in the preliminary estimate, in 2020 the country’s Gross Domestic Product fell by 2.8 percent. In 2019, the Polish economy grew by 4.5 percent. Although recession is always bad, initial projects at the mid of 2020 was that numbers will be even double worst. There are even business sectors showing significant growth during the COVID time which nobody would expect like construction growing approx. 10% comparing to last year, obvious one is ecommerce growing by approx. 22%. These, to some extent, positive data encourage the business and Polish Ministry of Finance to continue with the tax policy which focuses on fighting the tax optimization and on the other hand introduce reliefs designed to help economic sectors which suffer due to COVID.

It is already a tradition that turn of February and March every year brings the announcements of the Ministry of Finance, more or less expected by taxpayers. It is also our new reality that changes important for taxpayers are announced from the media (Twitter). Although the manner of communicating seems to be a bit not formal, after few lessons, we learned that we should take them seriously. The tweet was followed by the draft of the bill which is now processed by the Parliament and will be binding soon. Here are recent news which are of great importance for the taxpayers.

Three more months for CIT in Poland

Public Finance Committee adopted the amendment, thanks to which the deadline for settlement and CIT payment will be postponed from March 31st to June 30th, 2021. The Ministry assumed that such a move would improve the financial liquidity of entrepreneurs in a difficult period of state pandemic. Very similar solution has been adopted last year, it will again give taxpayers more time to settle the liabilities and for sure will improve their cash flow. According to the estimations this solution will leave on the taxpayer’s account approx. PLN 10 billion.

Facilitations for taxpayers in Poland after Brexit

Another important twitter sourced amendment is related to Brexit. Due to large VAT gap, Poland has very strict rules applying to the VAT settlements of the taxpayer from outside of European Community, as a rule if such entity is performing VAT taxable activities in Poland it should act via fiscal representative. It can be tax adviser or accountant which will be jointly liable for tax arrears. This solution is a costly one and have number of additional formal requirements.

After Brexit suddenly, UK moved outside of EC, but Polish Government wants to keep the business and investors inflow from the island, therefore it was decided to introduce exception from fiscal representative obligation for the taxpayers seated or having permanent establishment in UK, Ireland and Norway.

No postponement in other obligation for Polish taxpayers

Although the most important obligation is postponed – filing and payment of CIT, there is no such sing in other obligation which should be observed by most of the taxpayers. CbC notification must be submitted until end of March. The same deadline applies for withholding tax reporting and filing of IFT-2R forms.

New withholding tax regime to be finally introduced by Polish government

It is announced that mid of 2021 new withholding tax regime will become binding for the taxpayer. This regulation is postponed since almost two years, Polish Government will resign from so called relief at source rule. It means that taxpayers which are fulfilling conditions for exemption or lower withholding tax rate will be obliged to pay the tax upfront and then apply for a refund. Bottom line in the economic sense should be the same but this amendment will influence cash flows of the entities which will not prepare their structure upfront.

Postponed deadline for transfer pricing documentation in Poland

Due to COVID Polish Government decided to postpone by additional 3 months deadline for preparation of transfer pricing documentation, effectively, this year deadline for preparation of TP is 12 months after the end of the tax year, usually TP for 2020 will be prepared until end of 2021.

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