A project to amend the CIT Act

The Minister of Finance, Funds, and Regional Policy is working on a project to amend the Corporate Income Tax Act (hereinafter: the „CIT Act”). The assumed changes include:

• development of an alternative taxation system – a lump-sum tax on income of capital companies (extension of the catalog of entities entitled to lump-sum taxation to include limited partnerships and limited joint-stock partnerships; resignation of the condition concerning the upper limit of income of taxpayers subject to lump-sum taxation and, consequently, also surcharge of tax obligation; granting flexibility in the deadlines for repayment of the tax liability with regard to the so-called preliminary correction, and, in certain cases, also the abolition of the obligation to pay it),
• introduction of holding regime, which will be based on CIT exemption of 95% of the amount of dividends received by the holding company from subsidiaries and full CIT exemption of profits from the sale of shares in subsidiaries. The expected effect of introducing the proposed solutions is creating in Poland a tax regime attractive for locating holding companies,
• simplification of the rules connected with the establishment and functioning of tax capital groups,
• Simplification of rules regarding signing a declaration on the preparation of transfer pricing documentation, new documentation exemptions, an extension of the deadline for submitting transfer pricing documentation, change of penalties under the penal fiscal code,

modernization of withholding tax at source regulations (narrowing the material and personal scope of the tax refund procedure; extension of the subject scope of the opinion on the application of the exemption to preferences provided for in double tax treaties – i.e. reduced withholding tax at source rates or exemption from withholding such tax).

The project is scheduled to be adopted by the government in the third quarter of 2021.