Companies & corporate law

CIT for general partnerships and limited partnerships

The list of legislative and programme works of the Council of Ministers has recently included a draft act amending the Personal Income Tax Act, the Corporate Income Tax Act, the Lump Sum Income Tax on Certain Incomes Earned by Natural Persons and certain other acts: https://bip.kprm.gov.pl/kpr/bip-rady-ministrow/prace-legislacyjne-rm-i/prace-legislacyjne-rady/wykaz-prac-legislacyjny/r7485887,Projekt-ustawy-zmianie-ustawy-o-podatku-dochodowym-od-osob-fizycznych-ustawy-o-p.html

As is clear from the assumptions presented, the aim of the changes is to tighten the system of corporate and personal income tax so as to ensure that the amount of tax paid by large companies, in particular multinational companies, is linked to their actual place of income.

The project assumes that the CIT Act will cover limited partnerships and general partnerships which have their seat or management board in the territory of the Republic of Poland.

However, the change does not apply to all general partnerships, but only to those whose „income tax payers participating in the profits of such general partnerships are not disclosed, which results in the possibility of these entities evading income tax.

As part of the introduced changes in the scope of the CIT Act, the new solutions provided for in the draft also include, among others:

  1. Increase of the revenue limit for the current tax year from EUR 1.2 million to EUR 2 million entitling to benefit from the reduced 9% CIT rate;
  2. adjustment of national regulations concerning sources of income earned by non-residents in the territory of the Republic of Poland to the standards of double taxation conventions amended by MLI;
  3. transfer of the obligation to settle the tax on the disposal of shares in the so called „shares”. real estate companies from seller to real estate company;
  4. extending the scope of transactions to be verified for compliance with the arm’s length principle, in particular where the beneficial owner is established in the so-called ” The Commission has also been working on the so-called „tax haven”, and increased documentation obligations for such transactions (transfer pricing).

As part of the changes introduced in the scope of the PIT Act, the amendment to the PIT Act also introduces solutions consisting of, among others on:

  1. the elimination of the relief referred to in Article 27g of the PIT Act (the so-called „PIT Act”). abolition relief),
  2. introduction of a solution entitling taxpayers to take advantage of the exemption from tax on revenue from buildings – similarly as in the CIT Act.
Author team leader DKP Legal Michał Puk
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