From 1 January 2023, the amended CIT regulations came into force. The following article includes the top 8 changes:
Estonian CIT
- recognizing part of expenses, depreciation write-offs and write-offs for permanent loss of value related to the use of assets as expenses not related to business activity,
- specifying the condition for the expiry of the liability for the initial adjustment,
- modification of the minimum employment condition.
Minimum CIT
- suspension of the minimum CIT tax until December 31, 2023,
- increasing the profitability ratio to 2%,
- extension of the catalog of exclusions from the minimum CIT tax (including small taxpayers, taxpayers whose profitability in one of the last three tax years was above 2%, taxpayers in bankruptcy or liquidation, municipal companies).
- introduction of a voluntary, alternative method of determining the tax base.
Tax on shifted income
- clarifying that a related entity that earns passive income (income) cannot have its registered office in Poland,
- the tax on shifted income covered only the costs recognized by the taxpayer as tax deductible costs.
Withholding tax
- extending the validity of the original declaration until the end of the year and the subsequent declaration until the end of the month following the end of the tax year,
- The obligation to submit a follow-up declaration only arises by the last day of the month following the end of the tax year,
- easing the condition of not collecting WHT by the remitter with regard to taxation of interest and discounts on certain bonds.
Polish Holding Company (PSH)
- clarification of the provisions concerning the period in which the conditions necessary to benefit from the CIT exemption for dividends or profits from the sale of shares are to be met,
- expanding the catalog of legal forms of a holding company with a simple joint-stock company,
- granting the right to use the dividend exemption by the holding company,
- change in the definition of a subsidiary (removal of the condition of not having more than 5% of shares in other companies, having all the rights and obligations in a company that is not a legal person and taking advantage of the exemption under SEZ or PSI),
- exemption from tax of the entire dividend received by the holding company, instead of 95%,
- addition of provisions excluding the remitter from the obligation to collect withholding tax.
Documenting the so-called Paradise Transactions
- raising the documentation thresholds for direct paradise transactions carried out with both related and unrelated parties to PLN 2.5 million for financial transactions and PLN 500,000 for a transaction other than a financial transaction,
- Elimination of the documentation obligation for so-called indirect paradise transactions.
Repeal of the Hidden Dividend Regulations
- complete repeal of the provisions on the so-called Hidden dividend. These provisions were to enter into force on 1 January 2023.
Foreign Controlled Entities (CFCs)
- change of regulations – when determining the income of a foreign entity, reliefs and exemptions provided for in the CIT Act are not taken into account.
