Polish Government’s tax response to fight COVID-19 pandemic

In relation to taxes, the bill implements four main areas where protective measures should be introduced in order to mitigate results of the pandemic:

• Improvement in the financial fluidity of enterprises;

• Postponement in execution of certain obligations;

• Employment security;

• Solutions enabling and improving implementation of the special regulations.

The list below contains most important provisions of the act related to the tax area.

Improvement in the financial fluidity of enterprises:

Tax advances / payments postponed

• Postponed deadlines for filing CIT tax return and making final payments (if any) for 2019  till May 31^st 2020.

• Deadline for advance payments for PIT advances on employment salary for March and April 2020 postponed to June 1st 2020. 

• Facultative postponement of deadline to pay the tax on income from buildings for months from March to May 2020 to July 20^th 2020 (condition applies at least 50% decrease in revenues from such source).

Loss carryback

• Enabling CIT and PIT taxpayers who suffer negative economic consequences due to COVID-19 to deduct the loss incurred in 2020 from the income earned in 2019 (when they achieve at least 50% less revenue in 2020 compared to 2019).

COVID donations deduction

• Enabling deduction of donations made for the prevention of COVID-19 - cash or in-kind donations (in full amount) from the income, made to entities carrying out therapeutic activities as well as those made to the Material Reserves Agency and the Central Sanitary and Anti-epidemic Reserves Database.

Bad debts

• Suspension of application of the provisions in PIT and CIT concerning “bad debts” to taxpayers whose income is at least 50% lower compared to previous year so that the debtor is not obliged to adjust tax deductible costs and input VAT in case of payment delays.

Real estate tax

• Introduction of provisions enabling the municipal councils to:

1. introduce for part of 2020 an exemption from the property tax for the indicated groups of entrepreneurs whose liquidity has deteriorated due to negative economic consequences due to COVID-19;

2. extend, by order of the executive bodies, the deadlines for payment of property tax instalments payable in April, May and June 2020 - no later than 30 September this year.

Suspension of tax proceeding / inspections

• The possibility to apply for suspension of any opened and ongoing tax proceedings on the grounds of personal or public interest (the nationwide state of epidemic should be sufficient for suspension as most tax proceedings are not active currently due to quarantine).

Exemption from social security contributions 

Separate set of regulations has been provided to self-employed persons and micro entrepreneurs, who, in addition to the general facilitating measures, will be exempted from the obligation to pay social security and health premiums (for themselves or their employees) for three months, provided that they meet a certain income threshold in that period. In a draft bill, presented by the Government on April 7^th, serving as complementary to the shield, the exemption has been broadened to include small and medium entrepreneurs as well (entities employing not more than 49 persons). We expect this regulation to come into force soon.

Postponement in execution of coming, new tax formalities / procedures

Postponing certain tax related obligations is caused mostly by logistic and operational difficulties caused by the epidemic. No new obligations should apply in that period, especially such requiring implementing new procedures within a company.

• The implementation of retail sales tax postponed to January 1^st 2021.

• Implementation of the new VAT matrix postponed to July 1^st 2020.

• Extension of the deadline for submitting transfer pricing information for 2019 to September 30^th 2020.

• Extension of the deadline for submitting a payment notification to an account not included in the VAT register (from three days to fourteen).

• Postponing of the obligation to file the new Single Audit File (declaration and records) from April 1^st to July 1^st 2020 for all taxpayers (voluntary filing available from May 2020).

• Postponement by three months of the deadline for reporting the information to the Central Register of Beneficial Owners.

• Extension of deadlines for tax schemes reporting, including the suspension of ongoing deadlines, but no later than June 30^th 2020.

• The Minister of Finances will be able to (during the epidemic) issue a regulation implementing different deadlines in relation to: transmission of data, information, declarations, reports, statements, requests, applications, contributions, fees and charges, as well as other deadlines for fulfilling the obligations to register and to draw up, approve, make available and transmit to the competent register, unit or body certain reports or information to assist operators in fulfilling their information and reporting obligations.

Employment security

The government provided for regulations providing tax exemption for contractors and self-employed persons up to a certain threshold (80% of the minimum wage) and for persons on a tax card or a lump sum taxation (up to 50%). Further certain increases were made in limitations of exemptions applicable in personal income tax (mostly for employee receivables and subsidies). In relation to PIT the deadline for filing annual return is still April 30^th, but Ministry of Finances said that no repercussions will be held against people who file their return a month later at the latest.

Solutions enabling and improving implementation of the special regulations

The act includes measures alleviating certain formal requirements of operating of tax authorities as well as provides means of delegating official competencies within the authorities personnel.

Postponing tax obligations available on general provisions as well

Irrespective of the above initiative, the general tax law includes regulations allowing to individually ask for postponement, split into installment (or in extreme cases even redemption) of any tax liability or social security contribution based on difficult situation of a given taxpayer. According to the planned measures, approach of the tax / social security authorities to acceptance of the individual requests should be less strict now with respect to the companies suffering negative consequences of coronavirus situation. The government also proposed that in relation to the applications described above, there will be no late payment interest applicable to rescheduled payments or administrative fee (4% of debt) applied.