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Good to know Polish Deal: minimum income tax suspended for a year

Polish Deal: minimum income tax suspended for a year

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by Anna Harasimowicz

27 July 2022 


The bill amending the CIT Act, which the Ministry of Finance presented at the end of June, suspends the application and modifies the minimum income tax regulations. This is yet another amendment to the Polish Deal legislative package which came into force at the beginning of the year. 


What is the minimum tax?


The minimum income tax was implemented in Poland at the beginning of 2022. It is levied on companies (of all sizes) and corporate groups which incur a loss from revenue sources other than capital gains or achieve a profitability for tax purposes (share of net income in revenues other than capital gains) not exceeding 1% in a tax year. The tax rate is 10% of the taxable base and consists of several components.



What is going to change?


The ministry now proposes to suspend the application of the minimum income tax between 1 January 2022 and 31 December 2022. This means that taxpayers will not have to pay it until 2024.


 

Moreover, the ministry wants to modify the taxation mechanism: 


  • the profitability ratio will be increased to 2% and will be calculated differently; 
  • there will be an option to choose a simplified method of calculating the taxable base for the minimum income tax purposes; 
  • certain taxpayers will not be subject to minimum tax, that is, small CIT taxpayers, municipal companies, taxpayers in bankruptcy or liquidation, healthcare establishments and taxpayers whose profitability in any of the last three years exceeded 2%. 


The minimum income tax has been controversial from the very beginning due to unclear provisions and complicated structure. 

 

Moreover, the war in Ukraine, which has severed supply chains and trade relations, is greatly affecting the business situation in Poland. As a consequence, more taxpayers may need to pay minimum income tax. That is why, we recommend starting to monitor your tax position right away.

 

If you have any questions about the minimum income tax, you are welcome to contact our experts. 

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Anna Harasimowicz

Auditor (Poland)

Associate Partner

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