From January 1, 2022, it is planned to introduce a new type of corporate income tax for organizations in Poland – the minimum income tax (minimalny podatek dochodowy od osób prawnych, CIT) в рамках программы Polski Ład as part of the Polski Ład program for the restoration and development of the Polish economy. This tax is supposed to apply to companies with losses, that is, low income and relatively high operating costs.

The minimum income tax applies to almost all CIT taxpayers: who have their seat or domicile in the territory of Poland and are therefore subject to taxation on all their income, regardless of where they are received, or to Polish non-residents acting through a foreign institution located on the territory of the country.

Those who pay personal income tax, individual entrepreneurs and some companies whose partners are only payers of personal income tax are not taxpayersof the minimum corporate income tax.

The following are exempt from the minimum corporate income tax:

• CIT taxpayers who start their business and those who have been running it for no more than 3 tax years (including the year of opening),
• CIT taxpayers whose income in this tax year was at least 30% lower than in the previous year,
• financial companies (banks, insurance, investment),
• taxpayers who have received income in connection with the operation of ships or aircraft in international traffic or the extraction of minerals, the prices of which depend directly or indirectly on quotations on world markets,
• taxpayers belonging to a group of at least two companies, in which one company directly owns 75% of the shares in the authorized capital of other group companies.

The main condition for the minimum corporate income tax will be low income or tax loss criteria. It will be paid by taxpayers, which:

• suffered a loss (from a source of income other than capital gains), or
• have received an income in revenue of no more than 1% (have a low share of income in income other than capital gains).

The tax base for the minimum corporate income tax will be the sum of four groups of values:

1) an amount corresponding to 4% of the value of income (from the source of income, except for capital gains) received by the taxpayer in the tax year, and

2) debt financing costs incurred on behalf of related parties - in an amount exceeding the value of the coefficient calculated as 30% of the difference between the organization's income (excluding interest income only) and the organization's expenses (excluding depreciation and debt financing costs), and

3) the value of deferred income tax resulting from the disclosure in tax calculations of an intangible asset that has not yet been amortized, to the extent that this results in an increase in gross profit or a decrease in gross loss, and

4) 4) expenses for an amount exceeding PLN 3 million, in an amount calculated according to the formula, where the basis for the amount is 5% of the difference between income (except interest income) and expenses (except depreciation and interest expenses).

The calculation base will be 4% of income, which in certain cases will be additionally increased by amounts specified by the legislator (for example, costs for debt financing or costs for specific intangible services that were incurred in favor of related parties and exceed the established limits).

Any reductions and tax deductions that reduce the tax base of the taxpayer in a given year are deducted from the tax base calculated in this way, with the exception of writing off bad debts, i.e. for unreliable payments.

The tax rate for the minimum corporate income tax is set at 10%.

An example of calculating the minimum corporate income tax:

OR

* exclude from the cost group the costs arising from the acquisition or improvement of fixed assets, as well as the costs of writing off depreciation on these fixed assets (only the costs of fixed assets are excluded, and the costs of intangible assets are not deducted),

** calculation: share = result x 100 / income.

The minimum corporate income tax paid can be deducted from corporate income tax in subsequent years, regardless of whether this tax is capital income or non-capital income of the organization. You can make a deduction on your CIT-8 annual tax return within 3 years of the year in which the minimum corporate income was paid. The deduction of the tax paid can be applied both in the case when the taxpayer has an income of up to 1% over the next 3 years (and must pay the minimum tax again), and when his income in these years exceeds this 1% and the minimum tax already in these subsequent years does not occur.

It is expected that the deadline for paying the minimum corporate income tax will be by the deadline for filing a tax return for 2022 or 2023, subject to proposed changes.

Amendments to the law on income tax and some other laws are currently being considered regarding the entry into force of the provisions on the minimum corporate income tax, including the suspension of the application of the innovation for 1 year, i.e. from January 1, 2022 to December 31, 2022 due to significant political and economic turmoil in the global economy.

It is also expected to make changes to the structure of the tax itself, i.e. in particular:

• an increase in the profitability ratio up to 2% when the method of its calculation is changed (including the exclusion from taxable expenses of payments for leasing agreements for fixed assets, the exclusion from revenue of the value of trade receivables sold to factoring organisations, the exclusion of excises),
• introduction of an alternative method of determining the tax base - at the choice of the taxpayer: tax base - 4% of revenue (tax rate - 10%) or tax base - 2% of revenue + passive costs, ie. debt financing and intangible services + disclosure of intangible assets (tax rate 10%),
• expansion of the list of benefits for this tax (for municipal enterprises, small taxpayers, taxpayers whose majority of income was received in connection with the provision of medical services, taxpayers whose profitability in 1 of the last 3 tax years was higher than the rate of 2% and taxpayers in case of bankruptcy or liquidation).