December is a good time to discuss and summarize the tax changes coming next year. What can we expect? Below we present the most important changes in corporate income tax that companies will face in 2024.
Minimum tax – a new form of corporate income taxation from 1 January 2024
From 1 January 2024 – after a two-year suspension period – the minimum tax regulations will apply. Taxation will apply to companies that incur an operating loss or achieve low profitability. However, for the purposes of the minimum tax, the tax result will be calculated on separate principles from the “classic CIT”. For example, a number of cost items can be excluded from such a calculation. This means that not every loss reported in the CIT-8 return will result in the need to pay minimum tax.
In addition, the legislator provided for a wide range of tax exclusions. The group exempt from the minimum tax will include, among others: small CIT taxpayers, companies starting businesses or reporting losses only temporarily, as well as entities characterized by low profitability due to the specificity of their industry.
Taxpayers will pay minimum tax for the first time in 2025.
Pillar II – global minimum tax
From 1 January 2024, the provisions of the Pillar II Directive introducing a global minimum tax will come into force in many European Union countries. The directive provides for the payment of a global minimum tax by large international business groups and large domestic groups in the EU with a global annual turnover of at least 750 million EUR.
Although in many countries the provisions of the Pillar II Directive have already been adopted or the legislative process related to their adoption is at the stage of finalization, Poland has still not presented a draft law implementing the Directive into the national legal order. It is worth noting, however, that despite the lack of adoption of national regulations, the Pillar II Directive may have a significant impact on the functioning of many Polish entities. As a result, some entrepreneurs may be charged with two new levies from 2024: at the national and global level. It is estimated that the provisions of the Directive may apply to even several thousand Polish companies.
Tax on transferred income in 2024
CIT taxpayers whose tax year coincides with the calendar year are obliged to settle the tax on transferred income in the CIT return for 2023 by 1 April 2024. This tax applies to certain “passive” payments to certain foreign related entities. The tax is 19% of the tax base, understood as the sum of passed-on income – i.e. passive expenses with the characteristics indicated in the regulations.
It should be remembered that the burden of proof that at least one of the conditions for being subject to tax on transferred income has not been met rests with the Polish company that has included the costs incurred for the benefit of a foreign entity covered by the provisions on tax on transferred income as tax-deductible costs. The taxability criteria relating to both the Polish taxpayer and the foreign entity must be verified, examined and documented, which will require the implementation of appropriate procedures.
The rules for settling tax on transferred income are still unclear and complicated, and there is little time left for settlement.
Shortening the depreciation period for non-residential buildings and structures
From 1 January 2024, micro, small and medium-sized entrepreneurs operating in communes with a high unemployment rate will be able to benefit from a shortened depreciation period for fixed assets in the form of buildings and non-residential structures from 40 years to 5 or 10 years, respectively, depending on the level of unemployment.
Pursuant to the introduced regulations, taxpayers who are micro-entrepreneurs, small or medium-sized enterprises within the meaning of the provisions of the Entrepreneurs’ Law Act will be able to individually set depreciation rates for their own self-produced fixed assets, which are non-residential buildings (premises) and structures, entered into the register of fixed assets for the first time and intangible assets of a given taxpayer, if the following conditions are met:
- the fixed asset must be located in a commune located in a poviat where the average unemployment rate is at least 120% of the average unemployment rate in the country, and
- in which the tax revenue rate per capita in the commune is less than 100% of the tax revenue rate for all municipalities.
The depreciation period of fixed assets in the form of buildings and non-residential structures will depend on the average unemployment rate in the district where the property is located.
